Supreme Court

Commissioner of Central Excise, Belapur Vs. Jindal Drugs Ltd. (Neutral Citation: 2024 INSC 354)

MANU/SC/0362/2024

30.04.2024

Excise

Process of labelling or re-labelling amounts to manufacture

Present is an appeal by the revenue under Section 35L(1)(b) of the Central Excise Act, 1944 (Central Excise Act) against the order passed by the Customs, Excise and Service Tax Appellate Tribunal('CESTAT').

By the impugned order, CESTAT held that as per Note 3 to Chapter 18 of the Central Excise Tariff Act, 1985 ('the Central Excise Tariff Act'), the activity of labelling amounted to manufacture and hence, the activity of the Respondent fell within the ambit of the definition of manufacture as per the said Note. Therefore, the Respondent was eligible for availing the CENVAT credit of the duty paid by its Jammu unit and was also eligible for rebate on the duty paid by it while exporting its goods. CESTAT further held that, there was no suppression by the Respondent and, therefore, the extended period of limitation was not available to the department (revenue).The core issue to be considered is whether the activity of labelling carried out by the Respondent amounts to manufacture?

The word 'manufacture' includes any process which is incidental or ancillary to the completion of a manufacture product; any process which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act as amounting to manufacture; or any process which in relation to the goods specified in the Third Schedule involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer.

Therefore, Note 3, post amendment, as it exists today contemplates three different processes; if any of the three processes are satisfied, the same would amount to manufacture. The three processes are:(i) labelling or re-labelling of containers; or(ii) repacking from bulk packs to retail packs; or(iii) the adoption of any other treatment to render the product marketable to the consumer.

Any one of the processes indicated in Note 3 to Chapter 18 of the Central Excise Tariff Act would come within the ambit of the definition of 'manufacture' under Section 2(f)(ii) of the Central Excise Act. There is no factual dispute as to the activity carried out by the Respondent at its Taloja unit. Whether the goods are brought from the Jammu unit or are imported, those are relabelled on both sides of the packs containing the goods at the Taloja unit of the Respondent and thereafter, introduced in the market or sent for export. In terms of Note 3 to Chapter 18, this process of re-labelling amounts to 'manufacture'. The view taken by CESTAT is the correct one and no case for interference is made out. The impugned order of CESTAT is affirmed. Appeal dismissed.

Tags : Activity CENVAT credit Eligibility

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