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TMI Blog2019 (2) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... following activity:- (a) Relabeling of import printing ink reservoir and printing ink cartridge before sale without involving any process of refilling. The original packing is only relabelled. (b) Refilling from bulk drums of 200 lts/50 lts to small packs consisting of printing ink reservoir and printing ink cartridges and labelling the small packs so refilled. (c) Blending and mixing of chemicals for the manufacture of printing ink make up solution and packing and labelling. (d) Relabeling of imported printing make up solution without involving any process of refilling. The original packing is only relabelled. (e) Refilling from bulk to small packs of wash solution and labelling. (f) Relabeling of imported wash solution without involving any process of refilling. The original packing is only relabelled. 3. The appellant imported ink in bulk and procured the container form third parties in open market. The ink was procured and refilled in these containers and labelled and cleared as such. Various show cause notices were issued to the appellant by invoking the extended period of limitation on the grounds: (a) Refilling of ink/labelling of the containers from bulk drum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been filed against the said order. He further submits that the imported ink is classifiable under Chapter 32 and there is no Chapter note to Chapter 32 for heading 3215 deeming a process amounts to manufacture. Since imported ink in bulk after being refilled/relabelled in the containers remained ink only in which no manufacture is involved. 6. He further submits that classification proposed by the department and the impugned order have several anomalies as there is no classification of the impugned goods was sought in the show cause notice and during the personal hearing, the Commissioner has made altogether new case by proposing classification of the impugned product. The Commissioner deviated from the earlier stand and classified the goods under heading 8443 99 60 of the Tariff. The Commissioner committed an error by holding that classification of the goods under sub heading 8443 30 10 as parts accessories of the goods of heading 8443 39. The adjudicating authority was uncertain of the classification of the goods under which the duty demand has been raised and to change classification, burden of proof lies on the department which the department has failed to discharge. He fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for import of identical ink/ ink cartridges/reservoirs is an appealable order and in the absence of any challenge of the department, the same has been finalized. 8. With regard to the denial of credit on the ground that mere change of labels of printing ink make up cartridges and printing ink wash solution does not amount to manufacture. The submission of the appellant is that by virtue of Chapter Note 10 to Chapter 29, the activity of relabeling undertaken by the appellant in respect of wash solution amounts to manufacture. 9. He further submits that the department has taken the contradictory stands, on the one hand the impugned order dated 28.9.2012 has confirmed the demand that labelling of ink reservoirs, cartridges, etc. amounts to manufacture. On the other hand, it has denied the credit on imported printing ink make up cartridges and wash solution on the ground that such labelling does not amount to manufacture. He has relied on the Chapter Note 7 to Chapter 32 to hold that changing of labels or relabeling does not amount to manufacture. 10. The contention of the learned Counsel is that once the duty has been collected by the department, it is not open to the department to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orth India Pvt.Ltd. vs. CCE-2011 (271) ELT 321 (SC). He submits that the appellant in their ER-1 returns filed in November, 2010 have themselves described the goods as "Printing Ink Cartridges" and have classified the same under chapter heading 32159090. The appellant has wrongly classified the goods undser this chapter. This chapter sub heading covers others of chapter heading 3215 „Printing Ink, writing or drawing ink and other inks, whether or not concentrated or solid. The cartridges being manufactured and sold by the appellant cannot fall under this chapter heading in as much as they are suitably classifiable under chapter heading 8443. He therefore submits that the impugned order is to be upheld. 15. Heard the parties and considered the submissions. 16. On careful consideration of the submissions made by both sides, following issues emerge: (a) Whether the activity undertaken by the appellant refilling ink from bulk containers to different types of reservoir and printing ink cartridges shall amount to manufacture (b) Whether if the activity undertaken is a manufacture whether the classification of the goods can be changed by the adjudicating authority without allegi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a quality code printed on the label there is a sump chip below the container which allows the printer to identify the printing ink. The said reservoir has since been discontinued and is forming a miniscule portion of the entire demand. (iii) Ink Cartridge: Plastic container with a cap which is used to replenish the ink in the printing ink reservoir. The cartridge does not have any quality code printed on it. The cartridge is simply mounted on top of the assembly to replenish the ink reservoir. There is a spring loaded mechanism to prevent the flow back of the ink. (iv) Bag-in-Box: Plastic bag having a capacity to hold 5 litres of ink placed outside the printer. The demand pertaining to bag in box has been dropped by the Commissioner however the same was not deducted due to a quantification error. (v) Jerry Can: Simple plastic cans which can hold printing ink up to 25 ltrs. Like the bag in box the demand on account of jerry cans was also dropped but was not deducted due to quantification error by the Commissioner. (vi) Printing Ink Bottle and OCC Cartridge: These are simple bottles which hold printing ink in various capacities of 200 ml, 1 litre and 2 litres. These bottles are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,] and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. 20. From the above provisions of section 2(f) defines the term 'manufacture' in an inclusive manner which covers both the processes which are commonly understood as manufacture as well as the processes covered in the inclusive clause which are deemed to be manufacture. Hon'ble Apex Court has determined the tests for manufacture is whether the process in question brings into existence a new commercial commodity which is distinct from the starting material, having different name, character or use in the case of Delhi Cloth and General Mills Ltd. (supra) wherein the Apex Court observed as under:- 14.The other branch of Mr. Pathak's argument is that even if it be held that the respondents do not manufacture "refined oil", as is known to the market they must be held to manufacture some kind of "non-essential veget ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, and it is required to be changed into various shapes and sizes so that it can conveniently be used, no transformation takes place if the character and the end use of the first product continue to be the same. An illustration of this principle is brought out by the judgment in CCE, New Delhi v. S.R. Tissues, 2005 (186) E.L.T. 385 (S.C.). On facts, in the said case, jumbo rolls of tissue paper were cut into various shapes and sizes so that they could be used as table napkins, facial tissues and toilet rolls. This Court held that there was no manufacture as the character and the end use of the tissue paper in the jumbo roll and the tissue paper in the table napkin, facial tissue and toilet roll remains the same. 23. We find that in the present case also filing in to containers enables the impugned items to be used as printing ink. However there is no change in the essential character or end use of printing ink. Thus, no transformation takes place which would result to be referred as manufacturing activity. 24. Further in the case of S.R. Tissues Pvt.Ltd. (supra) again the issue of manufacture came before the Hon'ble Apex Court. In the said case, the Apex Court has observed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test as to whether the commodity after the change takes in a new name, though in stated circumstances, it may be useful to resort to it. This may prove to be deceptive sometimes, for it will suit the manufacturer to retain the same name to the end product also. The 'character or use' test has been given due importance by pronouncements of the Supreme Court. When adopting a particular process, if a transformation takes place, which makes the product have a character and use of its own, which it did not bear earlier, then the process would amount to manufacture under Section 2(f) irrespective of the fact whether there has been a single process or have been several processes." 14. Applying the above tests, we hold that no new product had emerged on winding, cutting/slitting and packing. The character and the end-use did not undergo any change on account of the above-mentioned activities and, therefore, there was no manufacture on first principles. 25. Further in the case of A.D. Steel Syndicate (supra) wherein this Tribunal has held as under:- "Wherever legislature wanted to declare the process of repacking into small containers as amounting to manufacture it has so provided in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.Merely because the Indian Standard specification uses the words "dry powder charge" it does not become a specific commodity different, liable to duty. One of the meanings of the word "charge" in The New Shorter Oxford Dictionary is "the quantity of something which a receptacle, mechanism, etc., is designed to bear or receive at one time; especially the appropriate quantity of explosive for a gun". That appears to be the meaning where the term is used in the specific manner as signifying a quantity of powder required for the application. It is interesting and significant to note that the tariff heading has been taken from the Harmonised System of Nomenclature Explanatory Notes, which contain the same heading 38.13 of the Custom Corporation Council. The Explanatory Notes to this Nomenclature in fact explain that charges for fire extinguisher classifiable under heading 38.13 are light weight containers of glass thin sheet metal etc. designed themselves into a fire extinguisher contain various preparation of fire extinguisher with the nature of which is amplified further. By such definition it is only a person who makes such containers who manufactures a charge. Unless otherwise p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heading has come into existence amounts to manufacture. This approach is totally erroneous as the printing ink has been imported in bulk drums which are never questioned by the department but the Commissioner has classified the impugned items under sub heading 8443 30 10 by classifying the item as parts of printing ink would not render the activity refilling/relabeling amount to manufacture. Therefore, the activity undertaken by the appellant does not amount to manufacture. We also note that the fact the empty containers are procured from the third party and ink is imported which are not manufactured by the appellant. The containers so-called parts of printer are procured and ink is filled into the same and cleared as such. There is no change in the name, character and use of the so called parts. Therefore, even if the classification is taken to be correct, the test of manufacture is not satisfied. 30. Section 3 of Central Excise Act, 1944 levied excise duty and which is reproduced below: (a) a duty of excise to be called the Central Value Added Tax (CENVAT)] on all excisable goods [(excluding goods produced or manufactured in special economic zones)] which are produced or manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below: 7. In relation to products of tariff items 3204 19 81, 3204 19 82, 3204 19 83, 3204 19 84, 3204 19 85, 3204 19 86, 3204 19 87, 3204 19 88, 3204 19 89, 3204 19 90 and products of heading 3206, labelling or relabeling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment, to render the product marketable to the consumer, shall amount to manufacture. The Chapter note 7 to chapter 32 does not refer to heading 3215 or any Tariff item. Therefore, as per Chapter Note 7 to chapter 32, the activity shall not deem as manufacture. Therefore, we hold that the activity undertaken by the appellant does not amount to manufacture. . Accordingly the issue No.1 is answered in favour of the appellant. The issue No.2 33. We have gone through the show cause notice issued to the appellant and no classification was proposed in the show cause notice. However, during the course of adjudication, the Commissioner have travelled beyond the allegation in the show cause notice and classified the impugned products under sub heading 8443 99 51/52 of Central Excise Tariff without assigning any reason/evidence. It is settled law, that the show cause notice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the credit availed. In that circumstance, the duty paid by the assessee shall amount to reversal of credit and the assessee is not required to reverse the credit. Admittedly in this case, the appellant cleared the said imported goods after refilling on payment of duty. Therefore, if the activity does not amount to manufacture, in that case, the duty paid by the appellant shall amount to reversal of credit. Therefore, the appellant is not required to reverse the credit of CVD availed by the appellant at the time of import. The issue No.4 37. We find that the appellant is regularly filing their excise returns and specifically mentioned the activity of relabeling or packing does not amount to manufacture. In that circumstance, we hold that the activity undertaken by the appellant was in the knowledge of the department. Therefore, the extended period of limitation is not invokable. The issue No.5 38. In view of above, as duty confirmed against the appellant ais not sustainable, therefore, the question of imposing penalty does not arise. As the issue has been answered in favour of the appellant, therefore, we do not find any merit in the impugned order. Accordingly, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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