TaxTMI 
TaxTMI 
2000 (7) TMI 419
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....mpany and the name "Acquaguard ST-2000" and "Eureka Forbes Ltd.". The pre-filter candle and other accessories mentioned above are packed alongwith the filter received from the APIC in a card board box and this product is marketed as Acquaguard ST-1000 and ST-2000 water filter/purifier. The water filter unit received from the APIC is already duty paid under Heading 84.21 of the Central Excise Tariff. The question for consideration is whether the activities undertaken at Zirakpur/Chandigarh by M/s. Eureka Forbes Ltd. will amount to manufacture in terms of Section 2(f) of the Central Excise Act, 1962 read with Note 6 to Section XVI of the Schedule to Central Excise Tariff Act, 1985 and consequently the Central Excise Duty under Section 3 of the Act was liable to be paid by the party. The proceedings were drawn against M/s. Eureka Forbes by the Commissioner of Central Excise, Chandigarh-I which culminated in the Commissioner passing an order dated 11-12-1998 confirming a duty totally amounting to Rs. 1,18,97,460.00 on the company. He further imposed a penalty of equivant amount on them besides ordering for confiscation of some units seized from their premises and giving them an option ....
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....It is submitted that the filter obtained by the appellants from APIC is completely manufactured and ready to use for the filteration and purification of water and does not require any other parts or accessories to carry out the function of filteration, such as a pre-filter. It is stated that the pre-filter is supplied only to reduce wear and tear on the activated carbon cartridge. The ld. Sr. Advocate also relied on the certificate dated 28-11-1996 given by Central Food Technological Reasearch Institute, Mysore; certificate dated 20-1-1997 by M/s. SGS India Ltd., Secunderabad and dated 6-6-1997 that of university of Agricultural Sciences, Bangalore. All these agencies, on testing the water after its filteration through the filter (without the pre-filter chamber or bowl) have in the submission of the appellants certified the water to be safe and potable. Thereby establishing that the pre-filter is not an essential component of the filter and it can work effectively even without attaching the pre-filter to it. 6. Shri M.P. Singh, JDR on the other hand contended that the pre-filter is not an accessory but it is an essential part of the water filter. He submitted that it is not....
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.... Forbes and not the complete machine. The appellants have countered these findings by argueing that the goods are cleared by APIC under heading 8421.10 and not under 8421.90. The reliance is placed on the reports of the tests conducted on the water filter by various laboratories with and without the addition of pre-filter. The first of these reports is dated 6-6-1997 by the University of Agricultural Sciences, Bangalore. This report in conclusion states that Acquaguard ST 2000 itself is very effective in eliminating water borne pathogens providing safe drinking water. The result of bacterial efficiency remained same with or without using prefilter. Addition of prefilter does not either enhance or add to the functioning of AG ST 2000. In respect of turbicity of water, 8 NTU (unit of turbidity, we are told) was observed in raw water, 7 NTU in case of post acquaguard when pre-filter was not connected and 6 NTU was observed in post purifier water when prefilter was connected to the unit. In the test report dated 28-11-1996 of Central Food Technological Reasearch Institute (CFTRI), it is stated that Aquaguard ST 2000 destroyed nearly all pathogens in water very effectively. The 10 NTU t....
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....ty. Therefore, if the turbidity level of 10 NTU in the input water itself is at safe levels, then the use of Acquaguard (with or without pre-filter) is of little consequence. Therefore, we are of the view that none of the test results take us anywhere near to the proposition under consideration much less they advance the case of the appellant company. No experiment has been conducted to test as to the period for which the Acquaguard would retain the functional efficiency, if subjected to the filteration of water without first passing it through the pre-filter - which to our mind appears to be the more relevant test. 10. The pre-filter admittedly constitutes of a specially developed multilayered cartridge which strains out physical impurities present in the water such as dust, dirt and mud. There is no dispute that the pre-filter is compulsorily supplied with each and every unit of the Acquaguard filter sold. The brochure of the product recommends periodical back flushing of the pre-filter in order to remove particulate matter in it. The Activated carbon and ultra voilet chamber are very sophisticated and sensitive equipment. If the raw water with macro particles without fir....