Activity of Mere packing of Rechargeable batteries along with Battery chargers does not amount to Manufacture: CESTAT [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the mere packaging of rechargeable batteries along with the battery charger does not amount to manufacture. 

Eveready Industries India Ltd, the appellant assessee engaged in the manufacture of primary cells and primary batteries falling under heading 8506 of the 1st Schedule to the Central ExciseTariff Act, 1985, and in addition to manufacturing and clearance of the aforesaid goods on payment of duty, the assessee was also engaged in trading of “Eveready Recharge” which was packed by a job worker, The New Engineering Company, on behalf of the assessee. 

The assessee appealed against the order passed by the Commissioner of Central Excise, Kolkata for confirming the Central Excise duty Rs. 4,12,67,046/- was confirmed along with interest, and a penalty equal to the duty confirmed was also imposed against the assessee. 

B. L. Narasimhan, Deepro Sen, and Shovit Betal, the counsels for the assessee contended that to consider an activity as amounting to ‘manufacture’ there should be a new product with a distinct name, character, and use must come into existence. 

Also submitted that here involves only the mere packaging of the rechargeable batteries along with the battery charger and it does not amount to manufacture. 

Mihir Ranjan and S. S. Chattopadhyay, the counsels for the department contended that the activity of packing rechargeable batteries along with chargers and labeling the same is a process “incidental or ancillary to the completion of a manufactured product” and hence amounts to “manufacture” under Section 2(f)of the Central Excise Act, 1944. 

The Bench observed that in the case of Servo-Med Industries Pvt. Ltd. vs. CCE, the Supreme Court held that the the activity of mere packing of rechargeable batteries along with battery chargers and labeling the same as “Eveready Rechargeable/Ultima” and “Uniross/Power Bank” does not amount to manufacture. 

The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) held that the activity of packing has been held as not amounting to “manufacture” under the provisions of the Central Excise Act. 

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