Production machinery exemption extends to an integral coding and imprinting stage in the film-roll manufacturing process

The exemption under Notification No. 59/87-Cus. depended on whether the imported Signing Machine was used in the production of film rolls. Production was treated as a composite process extending beyond a single operation and covering interconnected stages that made the goods marketable. Because the machine performed DX coding and imprinting as part of the sequence from jumbo rolls through slitting, perforation, spooling, capping and packing, it was regarded as integral to production. The machine therefore qualified as machinery used for the production of film rolls, and the exemption was available.

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Issues: Whether the Signing Machine was a machine used for the production of film rolls so as to qualify for the benefit of Notification No. 59/87-Cus. dated 1-3-1987.

Analysis: The benefit of the notification was conditional upon the machine being used for the production of a commodity. Production was held to extend beyond a single process and may comprise a series of interconnected stages using different machines. The film underwent successive stages from jumbo rolls to slitting, perforation, DX coding, imprinting of identification marks, spooling, capping and packing before becoming marketable. The Signing Machine performed the DX coding and imprinting stage, which was an integral part of the process by which the film rolls were made ready for market. On that basis, the machine was treated as used in the production of the final commodity.

Conclusion: The Signing Machine qualified as machinery used for the production of film rolls and the exemption under Notification No. 59/87-Cus. was available.

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