Case Law Details
G.S. Pharmabutors Pvt. Ltd. Vs Additional Director General (CESTAT Delhi)
There is no dispute that the appellant had undertaken the peripheral processes. Whether any other process or processes, apart from peripheral processes, had been undertaken by the appellant so as to amount to manufacture contemplated in section 2(f) of the Excise Act would have to be examined. The adoption of any other treatment on the goods to render the product marketable to the consumer is one of the requirement set out under section 2(f) of the Excise Act for the process to result in manufacture. Thus, what has to be seen is whether in the present case, adoption of any other treatment on the goods had rendered the product marketable to the consumers.
The appellant has stated that it had purchased two raw materials namely, colour solution and thixo lacquer from Fiabila for the manufacture of nail enamel. The colour solution, being paint and varnish was obtained by the appellant in packages of 20/50 Kg. The several process undertaken by the appellant after receipt of the raw material have been enumerated above. They include not only testing as per the requirement of the Cosmetics Act and the 2016 Act but also homogenization of the colour solution by stirring it with the help of pneumatic stirrer and mixing of thixo lacquer in predetermined quantity with the colour solution in the kettle so as the adjust the viscosity of the resultant product so that it can be filed in small bottles as mandatorily prescribed for packing nail polish, with brush attached to the cap of the bottle for application on the nails. Thereafter, the nail enamel is filed in small bottles and labelled with the declaration of the retail sale price. This treatment adopted on the goods, according to the appellant renders the product marketable to the consumers.
It clearly transpire from the General Explanatory Notes that the preparations (e.g. varnish), which are suitable for other uses in addition to use as varnish (that is applied on wood) are classified as cosmetics under Chapter 33 only when they are – (a) in packings of a kind sold to the consumer and put up with labels, literature or other indications that they are for use as cosmetics; or put up in a form clearly specialized to such use (e.g. nail varnish put up in small bottles furnished with the brush required for applying the varnish). Thus, it is more than apparent that the colour solution supplied in 20/50 Kg drums from Fiabila cannot be regarded as nail enamel. The packing of nail enamel as contemplated in HSN General Explanatory Notes and the Cosmetics Act has special significance, as without the goods being packed in the specified packing they will not be classifiable or commercially known as nail enamel. The nail enamel takes its name, character and use as such only after being packed in the manner provided.
A conjoint reading of the definition of manufacture in section 2(f) (iii) of the Excise Act and Chapter Note 5 of Chapter 33 of the First Schedule to the Excise Act and the aforesaid treatment adopted on the goods (colour solution) by the appellant would render the product marketable to the consumer as nail enamel and, therefore, the appellant would be covered by the exemption notification dated 10.06.2003 since the appellant has adopted such a treatment to the goods that rendered them marketable to the consumer.
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