Per V.K. Agrawal :

The issue involved in this Appeal preferred by Revenue is whether the placing of different medicaments in a container amounts to manufacture in terms of Note 5 to Chapter 30 of the Schedule to the Central Excise Tariff Act.

2. Shri V.K. Verma, learned Departmental Representative submitted that the respondents M/s. Pure Pharma Ltd. manufacture medicines as well as purchase them from the market; that both the type of medicines were placed by them in a container which was called by them as medicine kit; and supplied to MP Laghu Udyog Nigam; that the duty was paid only on the medicine manufactured by the respondents and not on the bought out medicines; that a show cause notice were issued to the respondents for demanding Central Excise duty on the medicines kit itself; that the Assistant Commissioner under Order No. 191/2000 dated 11.5.2000 dropped the further proceedings holding that the medicine kit was prepared for a specific purpose that is to distribute the medicines free of charge to the needy ones as per the prescriptions of the Doctor and not the medicine kit as such; that the packing of different medicines in a printed corrugated boxes was just for convenience to supply the medicine in such a manner that the project receiving different kind of medicines kits could easily identify and differentiate them from other medicine kits and could be supplied to the Doctor for free distribution as per the disease of the patients; that the Assistant Commissioner further held that Note 5 to Chapter 30 is not attracted as neither the medicine kit nor the medicine contained therein were further sold in the market which was evident from the label pasted which read, "ICDB-II-MP Government supply - Not for sale"; that on Appeal the Commissioner (Appeals) also rejected the Appeal filed by the Revenue observing that the primary packing of medicines contained in the container was not changed and these were put together in their original packing in the box; further, the medicine could not be sold in the market in view of the specific marking `Not for sale' and, therefore, the clarification issued by the Ministry of Finance under F.No. 102/1/79-CX.3 dated 20.3.80 was applicable. Learned Departmental Representative, further, submitted that Note 5 to Chapter 30 clearly provides that "conversion of powder into tablet or capsules, labelling or relabelling of containers intended for consumers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture;" that the price contract with the MP Laghu Udyog Nigam is for medicine kit as a whole and not for individual medicine; that the packing of medicines in printed corrugated boxes is essential packing without which medicine kit will not remain medicine kit and will not be acceptable to the purchaser and as it affects the marketability of the medicines kit; this treatment of packing of manufactured medicine and bought out medicine comes within the purview of "adoption of any other treatment" as mentioned in Note 5 to Chapter 30 and accordingly this process is a deemed manufacture liable to Central Excise duty. He also mentioned that the decision in the case of Eupharma Laboratory Ltd. Vs. CCE Bombay, 2002 (141) ELT 136 (Tribunal), relied upon by the Commissioner (Appeals), is not applicable to the present matter as the facts are entirely different in as much as the dispute therein was about the classification whether under Heading 3003.20 or 3005.90.

3. On the other hand, Shri L.P. Asthana, learned Advocate submitted that the Note 5 to Chapter 30 does not apply to the facts of the present matter inasmuch as the medicine kit is not sold to the consumer which is pre-requisite for applying the Note. He placed heavy reliance on the findings contained in the Adjudication Order of the Assistant Commissioner. He also relied upon the Board's Circular No. 102/1/79-CX.3 dated 20.3.80 wherein it