LexM/S. MERCANTILE COMPANY versus COMMNR. OF CENTRAL EXCISE, CALCUTTA
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MIS. MERCANTILE COMP ANY
A
v.
COMMNR. OF CENTRAL EXCISE, CALCUTT A
OCTOBER 11, 2007
[ASHOK BHAN AND V.S. SIRPURKAR, JJ.]
B
Central Excise Tariff Act, 1985-Chapter 34, Sub-Heading
34. 02-Chapter Note 6-Cleaning preparation-Classification-
Filtration, re-packing (into smaller packs) and labeling of raw C
materials falling under Chapter 27, 29 or 38-Held: Amounted to
manufacture as it resulted in emergence of new product-New product
known in market by different name and for a different use and would
not fall either under Chapter 27, 29 or 38-Product classifiable under
sub-heading 34. 02 as a cleansing product-Central Excise Act, 1944- D
s.2{/).
Central Excise Act, 1944-s.llA and its proviso-Extended
period of/imitation-Invocation of-Held: Invokable as assessee made
deliberate attempt to evade excise duty by not informing the revenue
about the actual activity undertaken.
E
Orders were being received from Mis. Philips India Ltd., by
Mis. T. Paul & Sons and the same were executed by Appellant on
basis of an arrangement with Mis. T. Paul & Sons. In terms of the
said arrangement Appellant filtered, re-packed (into smaller packs) F
and labeled raw materials falling under Chapter Nos. 27, 29 & 38 of
the Central Excise Tariff Act, 1985 and thereafter marketed them
as different commercial commodities.
The questions which arose for consideration in the present
appeals are: (1) whether the activities carried on by Appellant G
amounted to manufacture and the products made by it were
classifiable under Tariff entry 3402.90 of the Act as held by the
Adjudicating Authority and (2) whether Appellant was guilty offraud,
concealment, etc. with a view to evade the payment of excise duty
1009
H
1070
SUPREME COURT REPORTS
[2007] 10 S.C.R.
A and under the circumstances the Department was justified in
invoking the larger period oflimitation under proviso to Section 1 lA.
Dismissing the appeals, the Court
HELD: 1.1. The goods covered under heading 34.02 are
B selected basically on the properties/characteristics of the products
than on the basis of constituents from which the goods are
manufactured. [Para24] (1080-F]
1.2. Chapter Note 6 of Chapter 34 provides that the packing
C or repacking of products of sub-heading No. 3402.90 into smaller
packs, including packing or repacking of bulk packs to retail packs
or adoption of any other treatment to render the product marketable
to the consumer shall amount to manufacture.
(Para 25] (1081-A, B]
D
1.3. The clause of 'manufacture' with reference to repacking
from bulk packs to retail packs introduced by the Finance Act from
1994 clearly points to the fact that even if the bulk material is
identifiable excisable goods, the fact ofrepacking from bulk to retail
pack would render the product separately classifiable. Admittedly,
E the product manufactured by the appellant is used as cleanser. It no
longer remained the product which was supplied to the appellant. It
was known in the market by a different name and for a different use.
The same would not fall either under Chapter 27, 29 or 38. The same
would fall under sub-heading No. 34.02 as a cleansing product.
1 ,
F
[Para 28] [1081-D, E, F]
1.4. The contention of appellant that a note similar to Chapter
Note 6 of Chapter 34 was introduced in Chapter 29 and 38 with effect
from 1.3.1997 and till that date the repacking or re-labeling of the
goods supplied to it which were classifiable under Chapters 27, 29
G and 38 could not be covered under Chapter 34 cannot be accepted
as the goods after repacking were being supplied and marketed as
cleansing products, which is evident from the outer cover of the 3
products shown by the appellant during the course of hearing.
[Para 29] (1081-F, G]
H
t
MIS. MERCANTILE COMPANY v. COMMNR. OF
CENTRAL EXCISE, CALCUTT A
1071
2.1. On the question oflimitation, the submission made by the A
Appellant that the letter dated 8th March, 1994 written by it to the
Assistant Collector of Central Excise, Calcutta disclosed the entire
facts to the authorities regarding the items manufactured by the
appellant cannot be accepted. The letter dated 8th March, 1994 did
not disclose the entire facts. The letter did not disclose the situation B
in its proper perspective. The authorities were not informed about
the actual activity undertaken by the appellant. The authorities were
also not informed that a new name has been given to the products.
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