Water-treatment units used for descaling do not qualify as production machinery, and exemption under Chapter Note 2 fails.

Electro Static Water Treatment Units used for descaling were not machinery for the production of a commodity, so concessional duty under the exemption notifications was unavailable. Chapter Note 2 to Chapter 22 applied only to natural or artificial mineral waters under headings 2201 and 2202, and could not be extended to a non-mineral water treatment process. The unit's activity did not amount to manufacture within the scope of the excise law, because it merely altered water quality and did not bring the product within the statutory heads relied on by the assessee. Concessional treatment was therefore denied.

---

---

Issues: Whether the appellant's Electro Static Water Treatment Units were machinery for the production of a commodity so as to qualify for concessional duty under the exemption notifications, and whether the process undertaken by the unit amounted to manufacture within the meaning of the applicable excise law.

Analysis: The product was found to be a descaling/water-treatment apparatus and not a machine producing water as a commodity. The exemption claim was based on Chapter Note 2 of Chapter 22, but that note applies only to natural or artificial mineral waters of headings 2201 and 2202. Since the appellant was not dealing with mineral water and the relevant process did not relate to those headings, the note could not be invoked to treat the activity as manufacture. The treatment did not convert the appellant's product into machinery for production of a commodity for the purpose of the exemption.

Conclusion: The claim for concessional duty was rejected and the issue was decided against the assessee.

Final Conclusion: The appeal failed in entirety, and the denial of concessional treatment under the notification was upheld.

Ratio Decidendi: A water-treatment unit used for descaling does not become machinery for production of a commodity merely because it alters water quality, and Chapter Note 2 to Chapter 22 cannot be extended beyond mineral water to treat such activity as manufacture.

---