Manufacture test for unfinished circuit breakers allowed Modvat credit where processing made goods marketable and complete.

Calibration, testing, inspection and final packing of miniature circuit breakers were treated as manufacture because the inputs were received as unfinished circuit breakers and the processes were necessary to make them marketable. The applicable standard also required calibration, supporting the view that the goods were not complete when received. Note 6 to Section XVI of the Central Excise Tariff Act, 1985 treats conversion of an incomplete or unfinished article having the essential character of the complete or finished article into a complete or finished article as manufacture, and on that basis the assessee was entitled to Modvat credit under Rule 57A.

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Issues: Whether the processes of calibration, testing, inspection and final packing carried out on miniature circuit breakers amounted to manufacture so as to entitle the assessee to Modvat credit under Rule 57A.

Analysis: The processes undertaken were necessary to make the miniature circuit breakers marketable. The record showed that the inputs were received as unfinished miniature circuit breakers for further processing, and the relevant standard also required calibration. Note 6 to Section XVI of the Central Excise Tariff Act, 1985 treats conversion of an incomplete or unfinished article having the essential character of the complete or finished article into a complete or finished article as manufacture.

Conclusion: The processes amounted to manufacture and the assessee was entitled to Modvat credit.

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