CCE Vs. INDIAN ADDITIVES LTD.

JUDGEMENT

(1.) THIS appeal is by the Revenue. The respondents are manufacturers of "Lubricating Oil Additives" falling under Heading 38.11 of the CETA Schedule. They are also a registered dealer trading in imported additives. During the period March 1997 to January 2000, they had imported certain additives in barrels with the foreign -supplier's brand name and had sold the same under dealer's invoices to their customers in India after adding their own name, address and brand name to the label on the barrels. Test certificates on samples drawn from the imported goods had also accompanied the goods in barrels so sold by the respondents. As the party considered this activity to be a trading activity, they did not pay duty of excise on the above clearances. After conducting investigations into the above activity of the respondents, the department issued three show -cause notices for the periods March'97 to Jan'99, Feb'99 to Aug'99 and Sept.'99 to Jan 2000 alleging mainly that the above activity amounted to "manufacture" in terms of Note 5 to Chapter 38 of the CETA Schedule and, therefore, duty of excise should have been paid on the goods sold by them in India after the aforesaid operations on the imported goods, which were allegedly intended to render the goods marketable. The SCNs invoked the extended period of limitation on the basis of alleged suppression of facts by the notice. The notices demanded duty of over Rs. 2 crores for the above period with interest thereon. They also proposed penalties on the respondents. These proposals were contested. In adjudication of the dispute, the Commissioner rejected the main allegation (that the activities carried out by the respondents on the goods imported by them amounted to 'manufacture' in terms of Chapter Note 5) itself and, accordingly, dropped the demand of duty and other proposals raised in the SCNs. Hence the present appeal of the Revenue.

(2.) WE have heard both sides and considered their submissions. The following are the allegations raised in the SCNs for levy of duty on the goods in question (as reproduced under STATEMENT OF FACTS in the memo of appeal):

(3.) LD . SDR submitted that the respondents were relabelling the goods when they removed the supplier's label and put up theirs on the container (barrel) thereof. Recapping of some of the barrels, which were opened for drawing samples for test, also amounted to 'relabelling' inasmuch as the new caps bore the respondents' name and logo. Ld. SDR, further, argued that the testing of samples and furnishing of the test certificates to consumers constituted a "treatment to render the product marketable to the consumers". On this basis, it was contended that the respondents' operations on the imported goods amounted to "manufacture" within the meaning of above Chapter Note. Referring to the Board's clarification reported in 1996 (87) ELT T18/19 relied on by the lower authority, ld. SDR submitted that the same had been withdrawn by CBEC in Circular No. 576/13/2001 -CX. dt. 16.5.2001. She claimed that such withdrawal had retrospective effect so that the present issue required to be settled in the light of the Board's circular dated 16.5.2001.