TMI Blog2002 (8) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11AC and of Rs. 5 lakhs under Rule 173Q on appellant No. 1 and also imposed penalty of Rs. 50,000/- on appellant No. 2. 2. The appellant No. 1 (hereinafter referred to as 'Company ) is engaged in the manufacture of EPS Mouldings and corrugated boxes containers falling under Chapter 39 and 48 respectively of the CETA which were exempt from duty during the disputed period. The appellant No. 2 was working as factory manager at that time. The duty demand has been raised against them on three counts - (i) an amount of Rs. 13,19,175/- has been demanded on account of manufacture of liquid gum by them in their factory and consumption of the same captively in the manufacture of corrugated boxes which were fully exempt from payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that mere preparation of the liquid gums from the gum powder by mixing water therein did not amount to manufacture of any new distinct product. The liquid gum, according to the learned Counsel, is not even marketable for having no shelf life. Therefore, the demand raised by the Revenue is wholly untenable under the law. 5. The learned SDR has only reiterated the findings of the Commissioner that the activity of the appellant-company in preparing the liquid- gum from the gum powder amounted to manufacture and as such is dutiable. 6. We have gone through the record and in our view, the contention raised by the learned Counsel deserves to be accepted. Admittedly, the appellant company is engaged in the manufacture of corrugated box ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains the same, also does not amount to manufacture under the law. In this context, ratio of the law laid down in (i) CCE v Mahavir Spg. Mills Ltd., 2001 (130) E.L.T. 65 (T), (ii) Laljee Godhoo Co. v. CCE, 2001 (132) E.L.T. 287 (T) = 2001 (46) RLT 112 (T); (iii) Twenty First Century Pharma Pvt. Ltd. v CCE, 2000 (126) E.L.T. 694 (T); and (iv) Lakme Lever Ltd. v CCE, Mumbai-III, 2001 (127) E.L.T. 790 (T), can be read with advantage wherein it has been so ruled. 8. The learned SDR has, however, referred to Chapter Note 3 of Chapter 35 of the CETA in order to contend that the activity of the company of converting gum powder into liquid by adding water amounted to manufacture. But his contention cannot be accepted for two reasons, firstly, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change its form from powder to liquid, it is difficult to hold that the company had rendered the powder marketable when it itself independently, as observed above, is marketable. The water is mixed by the company in the powder only with a view to bring it to their use in the manufacture of the corrugated boxes. There is nothing on the record to suggest if the liquid gum powder has any shelf life. The liquid gum powder is being captively used by the company and they are not marketing the same. The expression Render used in the Chapter Note 3 of Chapter 35, referred to above, indicates that the product must not be marketable before any activity is carried out in respect thereof, and it must become marketable only by virtue of any act perfo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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