Manufacture test for motor-fitted sewing machines and exemption for non-inbuilt motor models under excise notification

Fitting an electric motor to imported sewing machines was analysed under the manufacture test in Section 2(f) and Section Note 6 to Section XVI. The text states that manufacture requires a new and distinct article with a separate name, character, or use, and that adding a separately fitted motor did not change the essential identity of the sewing machine; therefore, the process was not manufacture. It further states that, even if manufacture were assumed, sewing machines with a separately fitted motor would still fall within the exemption for machines other than those with inbuilt motors under Notification No. 6/2002-CE, because an attached motor is not the same as an inbuilt motor.

---

---

Issues: (i) Whether fitting electric motors to imported sewing machines amounts to manufacture under Section 2(f) of the Central Excise Act, 1944 read with Section Note 6 to Section XVI of the Central Excise Tariff Act, 1985. (ii) If such process amounts to manufacture, whether the resultant sewing machines are eligible for exemption under Serial No. 201 of Notification No. 6/2002-CE dated 01.03.2002.

Issue (i): Whether fitting electric motors to imported sewing machines amounts to manufacture under Section 2(f) of the Central Excise Act, 1944 read with Section Note 6 to Section XVI of the Central Excise Tariff Act, 1985.

Analysis: Manufacture requires a transformation resulting in a new and different article having a distinct name, character or use. The imported goods were sewing machines even without motors, and after motor fitment they remained sewing machines. The addition of a motor did not bring into existence a new product or alter the essential identity of the machine. Section Note 6, which covers conversion of an incomplete or unfinished article into a complete or finished article, was held inapplicable on these facts because the machine was not shown to be a different commodity merely because it could also be operated with an attached motor.

Conclusion: Fitting the electric motor did not amount to manufacture, and no duty liability arose on that basis.

Issue (ii): If such process amounts to manufacture, whether the resultant sewing machines are eligible for exemption under Serial No. 201 of Notification No. 6/2002-CE dated 01.03.2002.

Analysis: The exemption entry covered sewing machines other than those with inbuilt motors. A motor separately fitted and connected through a V-belt was treated as not being an inbuilt motor. The resultant machine therefore fell within the exemption description even on the assumption that the process amounted to manufacture.

Conclusion: The resultant sewing machines were eligible for exemption under Serial No. 201 of Notification No. 6/2002-CE dated 01.03.2002.

Final Conclusion: The demand of duty, interest, penalty, and confiscation could not be sustained, and the appeal succeeded.

Ratio Decidendi: A process does not amount to manufacture unless it brings into existence a new product with a distinct name, character, or use, and a separately fitted motor does not make a sewing machine an inbuilt-motor machine for denying exemption where the exemption is confined only to machines with inbuilt motors.

---