IMPORTANT POINTS
1. Either an activity of labelling or relabelling of containers and repacking from bulk packs to retail packs OR adoption of any treatment so as to render the product marketable to the consumer would amount to “manufacture”.
2. If the product/commodity, after some process is undertaken or treatment is given, assumes a distinct marketability, different than its original marketability, then it can be said that such process undertaken or treatment given to confer such distinct marketability would amount to “manufacture” .

JUDGMENT

Anil R. Dave, J.

1. This appeal has been filed against the Judgment and Order dated 31.8.2004 passed in Final Order No 595/2004-NB(C) by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi in Appeal No. E/247/2004-NB(C), whereby the Tribunal has allowed the appeal filed by the Department and reversed the findings of the Commissioner (Appeals).

2. The issue which falls for consideration in the present appeal is whether the treatment given or the process undertaken by the appellant to Helium gas purchased by it from the open market would amount to manufacture, rendering the goods liable to duty under Chapter Note 10 of Chapter 28 of the Central Excise Tariff Act, 1985 (hereinafter referred to as ‘the Act’). Chapter Note 10 of Chapter 28 of the Act, in relation to ‘manufacture’, reads as under:

“10. In relation to products of this chapter, labelling or relabelling of containers and repacking from bulk packs to retail packs or adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture.”

In order to answer the aforesaid issue which arises for our consideration, it would be necessary to set out some facts giving rise to the present appeal. The appellant is engaged in the manufacture of Oxygen, Nitrogen, Carbon-di-oxide and other gases classifiable under Chapter 28 of the Act. The appellant had purchased Helium gas during the period commencing from December, 1998 to 31st March, 2001, from the market in bulk and repacked the same into smaller cylinders after giving different grades to it and then sold the same in the open market. The appellant purchased the said gas for Rs.520/- per Cum. Various tests were conducted on the gas so purchased and on the basis of the tests and some treatment given, the gas was segregated into different grades having distinct properties and sold at different rates to different customers.

3. The adjudicating authorities held that these processes undertaken by the appellants amounted to manufacture and consequently confirmed the demand with penalty. An appeal filed by the appellant before the Commissioner (Appeals) was allowed. Thereafter, an appeal was filed by the Department before the Tribunal and the Tribunal, by its impugned judgment held that the process undertaken or the treatment given by the appellant amounted to “manufacture” in terms of Chapter Note 10 of Chapter 28 of the Act. The aforesaid conclusion arrived at by the Tribunal is under challenge in this appeal.

4. On behalf of the appellant it was vehemently argued that the appellant had only conducted various tests like moisture test, etc. to determine quality and quantity of Helium gas in the cylinders. It was further submitted that even after the activity of testing, Helium gas remained as Helium gas only and there was no change in the chemical or physical properties. No new product, other than Helium gas came into existence and, therefore, it cannot be said that the appellant had carried on any manufacturing activity.

5. It was further submitted that the gas, when purchased by the appellant, was already marketable and, therefore, it cannot be said that the testing of the gas by the appellant had rendered the product marketable. In the circumstances, the process of testing cannot be said to be a manufacturing process, rendering the product marketable. It was also submitted that the crucial requirement for the application of the last portion of Chapter Note 10 of Chapter 28 of the Act is that by adoption of some treatment, the product should become marketable to the consumer. According to the learned counsel, the product, i.e. Helium gas was already in a marketable state when it was purchased by the appellant and, therefore, it cannot be said that the appellant made it marketable. To substantiate his claim, the learned counsel for the appellant relied on the cases of CCE v. LUPIN LABORATORIES1 2004 (166) A116 (SC) and LAKME LEVER LTD. v. CCE2 2001 (127) ELT 790 (T).

6. T