[Electricity Act] Relabelling Of Products Not 'Manufacturing', Such Activity Not Eligible For Industrial Tariff Categorization: Bombay HC
The Bombay High Court has held that the activity of relabelling products does not constitute 'manufacturing' under the Electricity Act, 2003. It stated that manufacturing under the Electricity Act would require conversion of raw materials into a fresh product using electricity-powered machines and thus relabelling would not fall within such activity.
The petitioner (Maharashtra State Electricity Distribution Company Ltd) challenged the order of the Appellate Authority, which held that the activity of relabelling of the products carried out by the respondent-companies would amount to 'manufacturing activity' under the Electricity Act, making it eligible for industrial tariff categorisation.
The Appellate Authority (respondent np.2) relied on the Chapter 18 of the Central Excise Manual for the definition of 'manufacture'.
Respondent No.1 relied on the Central Exercise Tariff Act to which considers the activity of labelling and relabelling as a manufacturing activity.
Justice Avinash G. Gharote noted that the deeming fiction created the Central Exercise Tariff Act cannot be made applicable to labelling and re-labelling being carried out by respondent no.1 as such deeming fiction does not exist under the Electricity Act.
“In the instant case, the deeming fiction created by Note 3 of Chapter 18 of the Central Exercise Tariff Act, cannot be made applicable, to the activity being carried out by the respondent No.1 for the purpose of categorization of the electricity tariff regime as such a deeming fiction does not exist in the Electricity Act.”
It stated that even though the work 'manufacture' has not been defined under Electricity Act, it can be understood as a “…a manufacturing activity, which would entail conversion of raw material into a fresh product, by the use of machines, powered by electricity.”
Thus, it stated the work of and re-labelling of a product cannot be considered as manufacturing for the purpose of the Electricity Act. Further, that an industrial tariff in terms of the supply of electricity would not be applicable such activities.
The Court held that the order of the Appellate Authority, which relied on the Chapter 18 of the Central Excise Manual for the definition of 'manufacture', was incorrect.
It thus quashed the order of the Appellate Authority and allowed the appeal of petitioner.
Case title: Maharashtra State Electricity Distribution Company Ltd vs. Jindal Drugs Limited And Anr. (WRIT PETITION NO. 10278 OF 2012)