TaxTMI 
TaxTMI 
1987 (1) TMI 216
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....eat rack, glass lid, instructions-cum-recipe book, and sell these assembled goods as twink simmermatic cuisinette. 3. M/s PCA say that duty has been paid on the stove and the griller which went into the units which they sell viz. twink inframatic cuisinette and twink simmermatic cuisinette. After much correspondence etc., the Central Excise came to the conclusion that M/s PCA had manufactured new excisable goods when they packed the articles to produce the twink inframatic cuisinette, twink simmermatic cuisinette from the different component parts and accessories which they bought from different people and which they bring to Nangal Shama in order to put the units together. M/s PCA resisted this move of the Central Excise department mainly on the ground that their activity at Nangal Shama was not the manufacture defined in the Central Excises and Salt Act and could not be defined as a manufacture even in conventional terms. They merely brought different goods manufactured by different people together to present them to customers in a form that is convenient and attractive to users of the devices but without undertaking any activity that can be remotely described as a manufa....
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....f the Bombay High Court in 1975(35) STC 502 - Commissioner of Sales Tax v. Trinty Products. The court ruled that a man who buys a glass bottle, rubber nipples and plastic caps from different dealers, packs them in one carton and sells them as auto-feeders cannot be said to have manufactured auto-feeders and that selling the articles under different labels cannot amount to manufacture. The Department has already classified the electric stove as an electric cooker in an order of the Assistant Collector of Central Excise, Pathankot dated 5.12.1983 though this assessment has been appealed before the Collector, Central Excise (Appeals), New Delhi. However, the Collector disregarding these facts said that the item was neither an electric stove nor an electric cooker but a component of electric cookers assessable under the residuary Item 68. 8. The inframatic is assembled from several other things, one being griller. This griller has already been charged to duty under Item 33C and, therefore, cannot be charged to that duty again. The Collector was mistaken in his understanding that the griller cannot work independently or that it cannot cook vegetarian food. A griller can cook independ....
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....y single item in the collection performs a separate function and packing them together and selling them together is only for consumer convenience and nothing else. 9. There have been no clandestine removal of any of the products, because the activity of the PCA depot at Nangal Shama was well known to the Central Excise; there had been several visits by Central Excise officers to the depot; the activity of packing twink inframatic cuisinettes and twink simmermatic cuisinettes had been witnessed and watched by the Central Excise officers who knew in details the process which M/s PCA adopted in order to make the goods saleable under the new names. 10. A great many arguments were presented on behalf of M/s PCA by the learned Counsels and they were both long and voluminous and travelled the length and breadth of the case and examined every nook and cranny of the dispute. It is impossible to elaborate them all here: for example the learned Counsel told the Bench how they were forced by the harassment of the Central Excise to approach the High Court of New Delhi and the High Court of Punjab, both of whom had to restrain the Collector in his headlong rush to penalise the pa....
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....ates, waffle plates, cook-n-serve bowl, lid for the stove etc. Some of these purchases go with the griller and others go to with the stove or cooker or whatever one may choose to call it. The two parties have been calling the different items by different names at different times but as we shall unfold in the succeeding paras by these discussions, it does not matter who calls what by which name. M/s PCA resist the word assembly, preferring the word packing and so we shall call the process packing. 12. The griller/stove/cooker with complementary items, are first packed individually in identifiable cartons, and then put together in a collection where the total unit of all the items can be seen to go together to form the unit: the twink inframatic and the twink simmermatic. The two units are not interchangeable, each having its own complementary hardware and they are advertised also to do the work of preparing food in different ways. The inframatic is said to cook by means of infrared rays - a process of cooking that ensures that none of the vital nutrient of the food cooked is lost, the way they are lost when food is cooked over open fires or by other conventional methods. Fur....
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....thout the other attachments and companion items, because then that would be the dispute, a dispute that we are not called upon to arbitrate. We have the goods, and we know what they are, what they contain, all the items in each collection or unit: the two parties agree that these are the goods, the items that together constitute the units of packing. 15. The twink inframatic cuisinette has the following items in the collection after packing by M/s PCA at Nangal Shama :- 1. basic griller mechanism or grillers 2. two sandwich plates 3. two waffle plates 4. one baking tray 5. a pair of tongs 6. one spatula 7. one surface scrubber 8. one instruction-cum-recipe book 9. one guarantee card. 16. The twink simmermatic cuisinette has the following items: 1. electric stove 2. one cook-n-serve bowl 3. one coaster-cum-meat rack it. one glass lid 5. one instruction-cum-recipe book. 17. These two units are gathered together from the different items listed and are packed in individual packings, one unit marked twink inframatic cuisinette and another marked twink simmermatic cuisinette. We will not enter into the dispute whether the stove....
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.... the learned Counsel for M/s PCA is not and cannot be a manufacture as understood in Central Excise law and as understood generally by people who are concerned with such things. 20. There would be much force in these arguments, had it not been for the fact that the law of Central Excise does not define manufacture. It may say that it includes this and that, but manufacture itself is not defined and this we believe is for a very good reason: it is impossible to agree on one definition for all the manufactures because there are hundreds and thousands of ways by which goods can be presented, brought out, created, made to appear; some processes of manufacture are complicated as when a motor car is produced from steel which is cut, drilled, stamped, rolled, polished, shaped and treated in multifarious ways until the finished car rolls out of the assembly line. In the making of it, several goods have contributed, many of which were themselves manufactures in their own rights. The manufacturing process expended on the car is long and laborious and needs skilled workers, engineers and technicians. New parts and components are created from the steel; the steel or steel sections, she....
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....cycle from parts he buys from the market, and the manufacturers who build a new motor car, there is a vast difference in the degree of application of machinery, appliances, apparatus, tools, expert knowledge of engineers and so on and so forth, to say nothing of raw materials and capital, expenditure of skilled work etc. 22. It is a matter of what one makes rather than how one makes it. A goods that requires little or no skill to produce it, is not less a product than one that took much skill and labour. It is a mistake to see manufacture only as conventionally understood and as meaning manipulations, treatment, shaping and forming of some materials into different products. The process can be a simple one of bringing different parts together to create a product that had not existed before. On the other hand, it can be a complicated process that depends not so much on bringing together different parts, as taking a material and shaping it into a new product to be used in totally different ways. The man who assembles a motor cycle from the parts he buys in different shops has made that motor cycle, which did not exist before he created a new motor cycle without forming or trea....
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....uisinette. M/s PCA argue that the griller is able to work independently contrary to what the Collector held and this possibly is a fact; but this misses the real point of the matter. The griller grills with the help of grill plates but these grill plates are themselves only one of a number of such accessories which accompany the griller mechanism. The instruction book says that the inframatic cuisinette comes ready fitted with the griller plates but these are easily removable and interchangeable with the waffle plates and the sandwich plates. There are instructions in the book how to fit the griller plate in position and what it can do in this fitting. The book also provides instructions how to fit the sandwich plates and the waffle plates and what are the dishes that these auxiliary parts of the mechanism can do. The book provides information, for example, that skewers are used for making tikka, bacon rashers, sheekh kababs and veal shashlik when they (skewers) are employed in conjunction with a grill plate. Similarly a baking tray is also used when the griller unit is fitted with the grill plate and in this combination it makes apple stew, asparagus au gratin, beef stroganof and ....
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.... turn the machine on and forget about it for the rest of the day because she knows on her return back home from work in the evening (or when she wakes up in the morning) the food has been cooked in the slow cooking cuisinette. It cannot be suggested that this highly desirable time-saving equipment can do its work properly unless it does it with the collaboration and in the company of the extra added and auxiliary items that come with the main electric stove/cooker. 26. All the accompanying items in the inframatic cuisinette and simmermatic cuisinette are made so that they fit. The grill plate, sandwich plate, the waffle plate all fit into the inframatic cuisinette and are easily removable. Indeed the accompanying items will be of no use if they are not made to measure so that they fit in the working equipment - the griller or stove/ cooker. The equipments like griller plates/the waffle plates, and cook-n-serve bowl are all attachments of the main pieces, quite clearly having been made to fit and to serve as their subsidiary helpmeets. 27. The instruction books support the arguments that each collection of inframatic and simmermatic is a team of collaborating parts, which....
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....nframatic cuisinette and the simmermatic cuisinette underwent at Nangal Shama by M/s. PCA is not a packing that brought into the open the dispute in the case before us. This is a packing which has never figured in any case that we have seen; M/s. PCA calls it packing, and to all appearance, it is indeed a packing and it seems that some Central Excise officers fell in with it. The collection of goods and items that came to Nangal Shama depot were assembled and packed in such a way that it created a veritable commodity that had never appeared before and one that had never been seen by Central Excise in the form it appeared at Nangal Shama. Packing perhaps it may be, but it is a packing with a difference, and what a difference it was. This packing is not the conventional one we usually see putting some goods in a box or a can and tying it up with straps or stappling it down, and then shipping it off to its destination. It is a packing that was meant to beguile by submerging in an appearance of packing the truth of the emergence of the units which would form new commodities and which should attract excise duty. The packing was not an innocent trade and business packing; after all, the ....
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...., there has not been a manufacture of soap, declared the Bombay High Court in 1981 E.L.T. 268. It was not a new and different product. Furthermore, shave cream, leather cream and shampoo are not known commercially as soaps. In this case, we cannot understand why the Central Excise Department announced that soap had been manufactured from soap, the thing remaining the same. It was not even that the soap, by addition of perfume or by colour became more soapy or lathered better or cleaned better. What the hon'ble court decided was just and proper, but we do not understand why this case has been quoted in favour of M/s. PCA in this dispute. 33. The Bombay High Court pronounced as improper an assessment based on advertisement 1980 E.L.T. 280. This assessment of the cuisinettes is not based on advertisement but on the fact of assembling and packing that took place at Nangal Shama; it is this activity; and not the advertisement put up by M/s. PCA about their product, that set off the dispute. Reference may have been made to their instruction book and advertisement but nothing is claimed by the Department in favour of their assessment by attributing to the product, properties that ....
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....oy the benefits of residence in this country while receiving the equivalent of such income, without sharing in the appropriate burden of British taxation. Judicial dicta may be cited which point out that however elaborate and artificial such methods may be, those who adopt them are entitled to do so. There is, of course, no doubt that they are within their legal rights but that is no reason why their efforts or those of the professional gentlemen who assist them in the matter, should be regarded as a commendable exercise of ingenuity or as a discharge of the duties of good citizenship. On the contrary, one result of such methods, if they succeed, is of course to increase pro tanto the load of tax on the shoulders of the great body of good citizens who do not desire, or do not know how to adopt these manoeuvres. Another consequence is that the Legislature has made amendments to our Income-tax Code which aim at nullifying the effectiveness of such schemes. Said the court in the next paragraph : Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it ....
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.... that if that money was a part of the consideration for the sale of the liquor, then failure to include it in the turnover was an act of avoidance of tax and the act found disfavour with the court. 38. The acts of M/s PCA was on a comparable level. They arranged their affairs in such a way that they could present a case that what they sold is not a manufacture of theirs but of somebody else's. If the worst came to the worst, it would be the other people who might have to confront the central excise and not themselves. However that may be, they set out on a journey that took many a turn; but one which to a right mind, looks as nothing but a scheme to avoid tax, if not evaded it: we see it as the latter, because the goods presented by them, the inframatic cuisinette and, the simmermatic cuisinette, are new goods which have ensemble values higher than they ever had before and which in their new ensemble, have never paid duty. It may be true that the goods were manufactured in the physical sense of manipulation and handling, elsewhere than at Nangal Shama, but the goods as presented by M/s PCA from Nangal Shama to the world were completed at their Nangal Shama depot. In this pr....