TMI Blog2013 (9) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... hese were meant for Industrial consumers, whereas smaller packs of 500 gm/1 kg made out of such bulk packs, were to meet the requirement of retail customers and hence safely be concluded as “retail pack”. The process of transferring/converting the bulk packs of soda ash in bags of 75/50 kg into smaller/retail packs of 500 gms/1 kg and affixing with the brand name of M/s. Tata Chemicals would result into “manufacture” within the meaning of Section 2(f) of Central Excise Act, 1944 and leviable to duty - The Adjudicating Authority had rightly confirmed the demand invoking the extended period - Also since, there was an element of suppression and non-disclosure of the activity of re-packing from bulk pack to smaller packs and selling the same affixing brand name of M/s. Tata Chemicals Ltd. from their unregistered premises, without payment of duty and without disclosing their said activity to the department, the penalties imposed on both the appellants were also justified - Decided against the assessee. - E/351, 352/2006 - A-808-809/KOL/2012 - Dated:- 28-6-2012 - Shri S.K. Gaule and Dr. D.M. Misra, JJ. Shri B.N. Chattopadhyay, Consultant, for the Appellant. Shri S. Misra, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - TATA SODA ASH A TATA PRODUCT - Manufactured by - Tata Chemicals Limited, Bombay House, Bombay-400023,-Repacked by :- Abdos Trading Company Pvt. Ltd. 8/1 HARDUTRAI CHAMARI ROAD, Howrah-711101-MAX RETAIL PRICE (Incl of all Taxes)-pkd. 3. The charge against the Appellant No. 1 was that in view of the Chapter Note 10 of Chapter 28 of CETA, 1985, repacking from bulk packs to retail packs or adoption of any other treatment to render the product marketable to the consumer, results into deemed manufacture as per Section 2(f) of Central Excise Act, 1944. Consequently, Central Excise duty of Rs. 68,28,654/- alleged to be not paid on such retail packs of soda ash cleared by the appellant no. 1 from their Hardutrai Chamaria Road premises during the period 2-4-1997 to 31-3-2001, was demanded under the first proviso to Section 11A(1) of the Central Excise Act, 1944. The ld. Commissioner confirmed the demand of Rs. 68,21,654/- vide its order dated 15-6-2004 and appropriated the amount of Rs. 5.00 lakhs already paid by the appellant; he had also imposed penalty of Rs. 68,21,654/- on the Appellant No. 1 and Rs. 5 lakhs on the Managing Director of the Company, i.e. Appellant No. 2. Aggrieved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of Central Excise dealer s invoices and challans and filing necessary Returns with the Department. 6. The ld. Consultant further submitted that though they were carrying out the activity of re-packing into smaller packs at their Head Office at Hardutrai Chamaria Road, Howrah, but as they were not aware of the provisions of Central Excise law, that is, re-packing of soda ash from bulk pack of 50/75 kgs. into smaller packs of 500 gm/1 kg would result into manufacture under the Central Excise Act, 1944 and the retail packs attract central excise duty, they had not discharged duty on the small packs of 500 gm/1 kg. The ld. Consultant alternatively submitted that in terms of Note 10 of Chapter 28 of the Central Excise Tariff Act, 1985, the process/activity of labelling or re-labelling of container and repacking from bulk pack to retail pack or adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture. He has argued that in terms of the definition of deemed manufacture under Section 2(f) of Central Excise Act, 1944 read with the said Chapter Note, it is only when re-packing is done from bulk packs , the condition laid down i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due to the use of word and in the said Chapter Note 10 of Chapter 28, labelling relabelling along with the activity of repacking from bulk packs to retail, though being an essential condition, but not fulfilled in the present case. 9. The ld. Consultant further submitted that the demand issued on 9-4-2002 for the period from 1-4-1997 to 31-3-2001, is barred by limitation prescribed under Section 11A(1) of Central Excise Act, 1944. He has contended that the trading unit at 100, G.T. Road, Rishra, Hooghly, had been sending standard packs of soda ash of 50/75 kgs. to their Chamaria Road premises for re-packing into retail packs. The said soda ash were transferred under delivery challans mentioning therein self packet department . Besides in their RG-23D Register, they had entered transfer of the said quantity of soda ash to Chamaria Road Unit, and the documents/returns were filed with the department periodically. Besides, all their records maintained at Rishra Road premises were periodically audited by the department. Therefore, there was no suppression of facts from the knowledge of the Department that they were carrying out the activity of re-packing of soda ash from the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bulk packs of Soda ash in bags of 50/75 kgs., were itself marketable, would not make any difference because repacking into smaller pack were meant for retail customers. The activities by which soda ash are transferred from the bulk packs to retail packs, would definitely attract Chapter Note 10 of Chapter 28 of CETA, 1985 as by such activity, the soda ash became marketable to the retail consumers. In this connection, the ld. A.R. placed reliance on the decision of the Hon ble Supreme Court in the case of Air Liquide North India Pvt. Ltd. v. Commissioner of Central Excise, Jaipur-I reported in 2011 (271) E.L.T. 321 (S.C.). 13. The ld. A.R. further submitted that the appellant had not disclosed the said process of re-packing of soda ash into 500 gms/1 kg from bulk pack of 50/75 kgs. to the Department nor disclosed clearly in their statutory/private documents maintained at their premises at Rishra. Even though in the challans of their Rishra premises, it is mentioned as self packet department , but in the said challans, they had not disclosed the said activities. He has further submitted that their premises at Rishra was registered as a dealer and not as a manufacturer and hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the activity of re-packing of soda ash into small/retail packs of 500 gms/1 kg from bulk packs of 75/50 kgs., results into manufacture , in view of Chapter Note 10 of Chapter 28 of CETA, 1985 read with Section 2(f) of the Central Excise Act, 1944. The ld. Adjudicating authority in arriving at the said conclusion had observed that the Soda Ash contained in bags of 75/50 kgs. are bulk packs and the packs of 500 gms/1 kg are retail packs . Assailing the said observation, the ld. Consultant submitted that the Chapter Note 10 prescribe that the activity of re-packing from bulk packs to retail packs only would amount to manufacture, whereas the appellant did not carry out re-packing from bulk pack but transfer soda ash from Standard Packs of 75/50 kgs. into small packs of 500 gms/1 kg. In nutshell, his contention is that the activity of re-packing would result into manufacture and are confined to those cases only where the bulk pack are converted and/or transferred into retail packs ; but when the contents are transferred from Standard packs and repacked into retail packs , the Chapter Note 10 of Chapter 28 is not attracted. 17. We find that in substantiating his afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e argument that the said Chapter Note is attracted only to bulk packs and not to standard pack , is unacceptable. 19. Now analyzing the facts of the present case in the above backdrop, it could easily be discerned that the soda ash in bags of 50/75 kgs. were mainly meant for industrial consumers to whom the appellants had sold from their Registered premises at Rishra by raising dealer s excise invoices and passed on the element of excise duty paid by the manufacturer M/s. Tata Chemicals Ltd.; the said customers, accordingly, were eligible to avail Modvat credit/Cenvat credit on the duty paid on soda ash. It is admitted by the Appellants that the soda ash were repacked into smaller packs of 500 gm/1 kg to cater the needs of the small household customer i.e. retail consumers at the behest of M/s. Tata Chemicals. Obviously, these customers were not interested in availing Modvat/Cenvat credit on the amount of duty paid on the soda ash. Therefore, the activity of re-packing from bags of 75/50 kgs., even if these were termed as standard packs , cannot lose the characteristic of bulk packs , since these were meant for Industrial consumers, whereas smaller packs of 500 gm/1 kg made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not involve repacking. All that is required to be done is to take the retail pack out of the wholesale pack in which it has been put. Conversion from bulk pack to retail pack would however require such repacking. The quantities of the commodity which are in the bulk pack would not be in any kind of packing suitable for sale at any commercial level and thus would have to be either repacked before sale or sold without any packing. 21. This judgment has been upheld by the Hon ble Supreme Court by dismissing the Appeal filed by the Department. We find that the facts of the said case are different from the present one inasmuch as, around twenty number of retail packs are placed in cardboard boxes to be sold in wholesale, whereas in the present case the bags of soda ash of 50/75 kgs were torn/dismantled and the contents were transferred and repacked into smaller packs of 500 gms/1kg in order to sale to the retail customer. Accordingly, the said ratio is not applicable to the present case. 22. Similarly, In Lupin Laboratories Ltd. s case, in order to maintain the continuity and regularity of intake of four drugs viz. rifampcin, ethambutol, isoniazid and pyrazinamide, all of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s raised was whether such activity of repacking (re-distribution of retail packs in different cartons) would result into manufacture in view of Chapter Note 4 of Chapter 33 of CETA, 1985. The Tribunal rejected the argument of the department, inter alia, observing that the activity consist of transferring one retail pack to another retail pack. We find that in the present case the issue involved is transferring the contents soda ash from bulk pack to retail pack and hence the said judgment is also not relevant. 24. In BOC India Ltd. s case, the respondent was engaged in the manufacture of various gases and they used to purchase Helium Gas from other manufacturers and sold the same under their Brand name and claimed the same as a part of their Trading activity. The issue raised before the Hon ble Supreme Court was whether mere labelling relabelling in absence of the activity of repacking from bulk packs to retail packs would result into manufacture as prescribed under Chapter Note 10 of Chapter 28 of CETA, 1985. In the present case there is no dispute on the aspect labelling and relabelling of the soda ash bags, but the issue is repacking from bulk pack (which the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phrase marketable to the consumer would naturally mean the marketability of the product to the person who purchases the product for his own consumption . Hence, the argument of the appellant that as the product was already marketable, the provisions of Chapter Note 10 of Chapter 28 of the Act would not be attracted, will have to be rejected. 20. For the aforetasted reasons, we agree with the Tribunal in holding that the appellant is liable to pay excise duty for the reason that it has manufactured Helium within the meaning of the term manufacture as explained in terms of Chapter Note 10 of Chapter 28 of the Act. 26. We find that the facts of the present case are analogous to the one decided in the above case by the Hon ble Supreme Court. In the present case also, the soda ash had been brought in bulk packs of 75/50 kgs and were then transferred into smaller packs of 500 gms/1 kg i.e. retail pack. The retail pack of soda ash as admitted, were meant for a different market segment i.e. for small consumer/retail consumer, whereas, the bulk packs were meant for industrial consumers. Therefore, the process/activity of transferring from bulk packs into retail packs resulted in e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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