Activity of Repacking from Retail to Bulk and Labelling does not amount to ‘Manufacture’: CESTAT [Read Order]

CESTAT Hyderabad - Activity of Repacking - Retail - Bulk - Labelling - Manufacture - CESTAT - Taxscan

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad bench has held that the activity of repacking from retail to bulk and labelling do not amount to manufacture under the Central Excise Act, 1961.

The department alleged that the appellant, M/s Global Adsorbents (P) Limited, was re-packing the product after sieving it to the required size because the purchase invoices of the appellant did not contain any grade of the product while the sale invoices had the grade indicated on them. In some cases, where the input invoices had the grade in them, it was found that the grade was inserted later which has been considered as manipulation of invoices by the Revenue.

The appellant further contended that it has not carried out sieving or any other process and hence the activity would not amount to manufacture and hence no duty is payable. Its purchase invoices did not indicate the grade of the activated carbon. On its request, in some of the invoices the suppliers had indicated the grade later. Hence, there was a difference in hand-writing which is presumed by the Revenue to be manipulation of invoices. It produced letters from the suppliers to buttress this assertion.

CESTAT president Justice Dilip Gupta and Technical Member Mr. P.V. Subba Rao observed that “apart from the fact that its purchase invoices / bill of entry do not indicate the grade of the material, while the sale invoices indicate the grade there is no other evidence brought on record by the Revenue that the Activated Carbon was sieved by the assessee. Since the assessee is registered with the Central Excise Department, officers could have gone and inspected and found out if the appellant had the equipment required for sieving the activated carbon to the required grades and was also carrying out this process. In the absence of such direct evidence, the Commissioner has drawn an indirect inference that material was received was sieved only on the ground that the purchase invoices did not have the grade of the material but the sale invoices. In our considered view, this discrepancy may be a cause for doubt but it required further investigation especially when the assessee had categorically denied having ever sieved the material before repacking. In the absence of any positive evidence, we are unable to accept the finding in the impugned order that the assessee had carried out this process.”

“Since we have found that the assessee has not packed from bulk to retail and there is no evidence, apart from the differences in the invoices, that the assessee actually carried out the process of sieving, the material to the required grade, the assessee is not covered by Chapter Notice 9 to Chapter 38. The processes carried out by the assessee of repacking from retail to bulk and labelling do not amount to manufacture,” the Tribunal said.

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M/s Global Adsorbents (P) Ltd vs The Commissioner of Central Excise, Hyderabad-I Commissionerate

Counsel for Appellant:   Shri Karan Talwar

Counsel for Respondent:   Shri AVLN Chary


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