ManufactureDefinition & Cases

By: Anshul Garg Prateek Tayal Shailender Chauhan Vinit Singh

Definition
As

per Section 2(f), Manufacture includes:

Incidental or ancillary to the completion of manufactured product,

Which is specified in relation to any goods in the Section or chapter notes of the First Schedule to CETA as amounting to manufacture, or

Contd

Which, in relation to the goods specified in the Third Schedule of CETA, includes:
Packing

or repacking of such goods in a unit container. Labeling or re-labeling of containers. Including the declaration or alteration of retail sale price on it. Adoption of any other treatment on goods to render product marketable to consumer.

Manufacturing or not..??

Check whether labeling and branding amounts to manufacturers. Understand deemed manufacture Check whether mere mention in tariff is enough to levy duty. Check whether Waste & Scrap is liable to duty. Understand the meaning of the word Produced Check whether assemble amounts to manufacture.

Case 1
Commissioner of Central Excise, Mumbai VS M/s Tikitar industries Date: 22.04.2010

Highlights
Appellant:

Comm. of CE, Mumbai Respondent: M/s Tikitar Industries & Anr. Issue: Whether the conversion of `Straight Grade Bitumen' not `Blown Grade Bitumen' amounts to manufacture or not.

Contd
The

process of converting straight grade bitumen into blown grade bitumen through Oxidation is known as blowing process, does not amount to manufacture and therefore, exempted from payment of Excise duty. Hence, the appeal was rejected and the product remained duty free.

Case 2
M/s Usha (I) Ltd. VS Commissioner of Excise Duty, New Delhi

Date: 13.01.2011

Highlights
Appellant:

M/s Usha (I) Ltd. Respondent: Comm. of CE, New Delhi Issue: Manufactured machinery in the nature of testing equipment to test the final products of the assesse should be excisable or not.

Contd
A

show cause notice was issued by the respondent before. Rejected the show cause notice. Undertaken such manufacturing process of the testing equipments to avoid importing of such equipments from the developed countries with a view to save foreign exchange. This shows that testing equipment was saleable and marketable.

Contd
Knowledge

of manufacture came to the department only subsequently and in view of non-disclosure of such information by the appellant and suppression of relevant facts, the extended period of limitation was rightly invoked by the department. Hence, the appeal was dismissed by the court and Usha (I) Ltd. had to pay excise tax with penalty.

Case 3 M/s Air Liquide North India Pvt. Ltd. VS Commissioner of Central Excise, Jaipur-I Date: 30.08.2011

Highlights
Appellant:

M/s Air Liquide India Pvt. Ltd. Respondent: Comm. of CE, Jaipur I Issue: 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.

Contd
The

gas after the tests and treatment was sold at profit of 40% to 60%. Different cylinders were given separate certificates with regard to the pressure, moisture, purification and quality of the gas. The gas in cylinders was sold to consumers which makes it marketable. Hence the appeal was dismissed.

Case 4 Commissioner. of Central Excise, Meerut-II VS M/s. Sundstrand Forms Pvt. Ltd.

Date: 30.08.2011

Issue
Respondent

is a firm engaged in the manufacture of computer stationery, business forms, etc., which falls subHeading Nos. 4901.90 and 4820.00 under the Tariff Act,1985 hence nil rate of excise duty. But the appellant allegedly engaged in evasion of excise duty on carbonless paper which emerged at the intermediate stage during the course of manufacture.

Highlights
The

company was claiming that they use to manufacture the carbonless paper which emerged at the intermediate stage but on examination it was found that the company use to purchase the material from the market. Hence the decision went into the favor of the appellant and fine was imposed on the company for evasion of tax.

Learnings
Under

which particular heading the intermediary product would fall or is it to be treated as a final or end product, under heading 4820.00 of the Schedule to the Central Excise Tariff Act. Whether or not the intermediary product in question has a marketability prospect and capability.

Case 5 Commissioner of Central Excise Vs Kapri International (P) Ltd. Date: 2002

Highlights
Appellant

:- Kapri International (P) Ltd. Respondent :- Commissioner of Central Excise Issue:- The issue before the Tribunal was the question of dutiabality of the products made from duty paid cotton fabrics. Held : When there is a change of identity due to the fabrics being subjected to a process of cutting resulting in a totally new marketable product having a distinct new market identity the said process is manufacturing hence the same becomes dutiable. Appeal allowed.

Highlights
Judgment

:- Merely because duty has been levied on the material from which the new goods are manufactured, the finished product would not be excluded from the levy of fresh duty if the Tariff Act so provides. Duty was imposed on the cotton fabric under Tariff Item 19(I) and the Tariff Act has made bed sheets, pillow covers, napkins etc. subject to duty under the same Tariff item. Therefore, the respondent was liable to pay duty on bed sheets etc. manufactured by him.

Case 6 COMMISSIONER OF CENTRAL EXCISE, Vs M/S GURUKRIPA RESINS PVT. LTD DATE: 2007

Highlights

APPELLANT:- COMMISSIONER OF CENTRAL EXCISE, NAGPUR RESPONDENT:- M/S GURUKRIPA RESINS PVT. LTD. Issue:- whether or not the process of lifting of water with the use of power, to the extent and for the purpose mentioned above, constitutes a process in or in relation to manufacture of goods, viz. Rosin and Turpentine Oil, with the aid of power?

Highlights
Judgment :- It was thus, argued that water being an integral part of the manufacturing process, which would include all stages and all processes which are necessary for the final product, its lifting to the overhead tank is a process in relation to the manufacture of the final product and since that process requiring the aid of power is integrally connected with the manufacture, the assessee is not entitled to exemption from duty

Case 7 M/s. Royal Enfield (Unit of M/s. Eicher Ltd.) VS Commissioner of Central Excise, Chennai Date: March 17, 2011.

Highlights

Appellant: M/s. Royal Enfield (Unit of M/s. Eicher Ltd.) Respondent: Commissioner of Central Excise, Chennai Issue: Issue that arises for our consideration in the present case is as to whether the cost of packing charges expended/incurred by the appellant-company is liable to be included in the assessable value of the motorcycles manufactured by the appellantcompany.

Case 8 Commercial Taxes Officer VS M/s. Jalani Enterprises Date: March 17, 2011.

Highlights

Appellant: Commercial Taxes Officer Respondent: M/s. Jalani Enterprises Issue: The issue which falls for our consideration is as to whether Jaljira which is a product manufactured by the respondent herein is only an appetizer and is not a masala and therefore liable to sales tax at the rate of 10% and not 16%. According to the High Court Jaljira would fall in the residuary clause and therefore tax should be levied at the rate of 10% and not 16%.

Highlights
Judgement:

The judgment and order passed by the 11 High Court is set aside.

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