AI Drafter 
TaxTMI 
TaxTMI 
2006 (4) TMI 269
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.... redeem on payment of redemption fine of Rs. 5 lakhs. Penalty of Rs. 10 lakhs have been imposed upon the said appellants under the provisions of Rule 173Q of the Central Excise Rules, 1944. In addition, plant, machinery, building and land belonging to the said appellants have been confiscated with an option to redeem the same on payment of redemption fine of Rs. 5 lakhs. Penalty of Rs. 5 lakhs have been imposed upon Shri Nitin J. Shah, Director of the company. 2. As per the facts on records, the said appellants are engaged in the manufacture of Heart Valve and ECG Electrodes falling under Chapter 90 of the Schedule to the Central Excise Tariff Act, 1985, for which they hold a proper Central Excise Licence and are clearing the same on payment of duty. There is no dispute about the said product. Apart from the manufacturing the above goods, appellants are importing various parts like, Plastic Tubes, Connectors, Blood Filters, Caps, Oxygen Filters, etc., from their holding company and are assembling the same in their factory. Their factory was visited by the Central Excise Officers on 25-11-1998, who conducted various checks and verifications. It was noticed that the product "....
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....lso assailed on the point of limitation on the ground that they were harboring bonafide belief that the process carried out by them does not amounts to manufacture. Their belief was also confirmed by a legal opining given by their consultant vide his letter dated 28-07-1996. 4. The Commissioner did not accept the above contention of the appellants and vide his impugned order held that the activity undertaken by the appellant results in emergence of a new product having distinct name, use and character, which is different from the various parts and components. As such, he held that the goods is a manufactured excisable commodity classifiable under heading 9018.00. As regards the limitation, the Commissioner invoked the longer period on the ground that the appellants had earlier filed a declaration, as regards the said product, when the same was exempted. No such intimation was given or declaration was filed, when the product subsequently became an excisable goods. As such, by holding that the appellants were indulging in clandestine activity, he confirmed the demand for longer period and imposed penalties, as detailed in the preceding paragraphs. The said order of the Commis....
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....eme Court is as to whether the resultant product which emerges after carrying out the said process is a new and different product having its own identity and but for the said processes the various inputs could not have been used as such. The nature and the extent of processes may vary from case to case. As such, it is to be examined as to whether a new and distinct article has come into existence known to the consumers and the commercial community as a commodity different from the various parts of which commodity is constituted. In the present case, admittedly, what was imported by the appellants was various parts like, plastic tubes, connectors, caps, blood filters, oxygen filter, stop cock, cable ties, etc. They were imported in bulk and not in kit form. The process of cut Tubing into specified lengths, join - Tubing with connectors and place caps, join -Tubing with blood filter/oxygen filter and then packing the tubings/connectors/filters in wraps and plastic trays and sterlising the same to make it bacteria free and then final by packing the same in custom pack and marketing it under a brand name, in our view, resulted in emergence of a new product, which takes a different iden....
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....he process for the assembly, transformation of the character of imported goods took place and a new product emerges. In the decision of Commissioner of Central Excise v. Hindustan Zinc Ltd., 2004 (166) E.L.T. 145 (S.C)., it was held that lead and aluminum sheets attached with headers to convert them into positive and negative electrodes was held to have converted into electrodes which was a new product known in the market with distinct name, character and use. 11. Tribunal in the case of Poonam Spark Pvt. Ltd., v Commissioner of Central Excise, Delhi reported in 2004 (164) E.L.T. 282 (Tri.-Del.) held that assembly of various components received from another company on a base plate bring into existence a new and commercially different commodity known as water purification and filtration system. In an another decision of the Tribunal in the case of Shriram Pistons & Rings Ltd. v Commissioner of Central Excise, reported in 2004 (164) E.L.T. 289 (Tri.-Del.) it was held that the activity of matching the size and other specifications of the piston rings with other rings and supplying them after making a coil piston ring set to be used in a particular model of motor vehicle will r....
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....the Hon'ble Supreme Court's decision in the case of Sterling Foods v. State of Karnataka & Another, 1986 (26) E.L.T. 3 (S.C). holding that conversion of pineapple fruit into slices or processing of shrimps, prawns and lobsters does not amounts to manufacture, inasmuch as they remain to be same commodity after subjecting to various processes. As already observed the question of manufacture is a mixed question of facts and law and has to be decided on the basis of processes undertaken and the final products emerging out of the said processes. In the above case, Hon'ble Supreme Court held that inasmuch as the final product remains the same as the starting raw materials, there was no manufacturer involved. The said decisions are not applicable to the facts of the instant case. Similarly, the appellant's reliance on the Supreme Court's decision in the case of Union of India v. J.G. Glass Industries Ltd., 1998 (97) E.L.T. 5 (S.C.) = 1997 (23) RLT 768 (S.C)., holding that printing of names and logo on the duty paid commodity does not amounts to manufacture as basic character of commodity is not changed, does not advance the appellant's case inasmuch as the final product emerged after vari....
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....ication filed for registration before the range officers, the appellants have only declared the Heart Valve and ECG electrodes, being manufactured by them but there was no mention of the custom pack. 19. In the ordinary course, we would have accepted the appellant's stand of entertaining a reasonable belief on the basis of option given by the legal consultant but for the fact that in the year 1991 they themselves have filed a declaration with the Central Excise department claiming them to be a manufacturer of customs pack and seeking exemption under Rule 174 read with various notifications. Surprisingly, no such declarations were filed by the appellants during the subsequent years, when their products became dutiable. One can argue that by filing a declaration in the year 1991, the fact of manufacture of custom pack was placed before the department and, as such, there was no suppression. However, in the absence of any such declaration filed in the subsequent year or any intimation having been given to the revenue about the continuation of manufactured said product, it cannot be accepted that the revenue would be aware of the continuation of the said production of the disput....
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....ent's artery and vein to the oxygenator and heart lung machine for blood purification during the course of the surgery, until his own heart resumes its function. The Custom Pack is, thus, a pack of accessories to the surgery. The items in the pack are one time consumables for surgery. At the end of a surgery, the items are disconnected and discarded. The dispute that has arisen between the Revenue and the appellant is whether the putting together of various items in a Custom Pack is manufacture of goods. I am of the view that the very name of Customs Pack described the activity as well as the item. The activity is one of packing and the items in the package are as ordered. That the activity is essentially one of packing is clear from the processes already described. Having, thus, noted that the activity involved is also packing, and the product is a custom made pack, the question to be answered is whether packing amounts to manufacture. Dictionary describes a pack as "full set of like or associated things", also usually as "combination of items considered as a unit". The items in the present case are associated things for a surgery and they are also a unique combination of items co....
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.... the Hon'ble Supreme Court Commissioner v. T.I. Diamond Chain Ltd. [2001 (130) E.L.T. A259 (S.C)]. Same was the finding of the Tribunal in the case of packing of soap, shampoo, hair oil and cream in the case of Adi Enterpriss [2002 (144) E.L.T. 379 (Tri. Mum.)]. 28. In view of what is stated above, I am of the view that Customs Pack in question is not manufactured goods and for that reason, no excise duty is attracted on it. The impugned order which has held to the contrary is required to be set aside and appeal allowed. Sd/- (C.N.B. Nair) Member (T) Dated : 24-5-2005 DIFFERENCE OF OPINION Whether the demand of duty is to be confirmed and various penalties reduced or/and set aside, as recorded by Member (J) or the impugned order is to be set aside in its totality and appeal allowed as held by Member (T). Sd/- (C.N.B. Nair) Member (T) Dated : 27-6-2005 Sd/- (Archana Wadhwa) Member (T) Dated : 27-6-2005 29. [Order per : Jyoti Balasundaram, Vice-President]. - I have heard both sides on the difference of opinion between the Members of the Original Bench. The issue relates to excisability of "custom pack" consi....
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....nufacture for the reason that it brings into existence a weighbridge, which is a new product known to the market. In B.P.L. India Ltd. [2002 (143) E.L.T. 3 (S.C)], the Supreme Court held that assembly of imported kits of VTR with colour monitors imported in disassembled/SKD condition falling under T.I. 68 of erstwhile Central Excise Tariff for levy of countervailing duty amounts to manufacture, upholding the Tribunal's finding that after undergoing the process of manufacture for the assembly, the product at the time of clearance from the factory was classifiable under T.I. 37BB and therefore, a transformation in the character of the imported goods took place and a new product emerged. In Hindustan Zinc Ltd [2004 (166) E.L.T. 145 (S.C.)] the Apex Court held that the attachment of lead and aluminium sheets with headers to see that lead and aluminium sheets become positive and negative electrodes so that current can pass through them, amounted to manufacture as the sheets were converted into electrodes which is a new product known to the market with distinct name, character and use. In the case of Poonam Spark P. Ltd. [2004 (164) E.L.T. 282] also, the same reasoning viz. emergence of ....