TaxTMI 
TaxTMI 
2016 (8) TMI 388
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....rt a hardware product called the Nucleus Device manufactured by a Chinese entity. Applicant proposes to undertake the activity of loading of business software on said Nucleus Device. Nucleus Device is classifiable under Tariff Entry 85176290 of the First Schedule to the Central Excise Tariff Act, 1985 as Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: other. The Nucleus Device would serve as a cashless currency transmitting apparatus. 2. These Nucleus Devices would be imported into India from a vendor in China. Prior to import of the Nucleus Devices, the Chinese entity would embed the basic input output system onto the Nucleus Devices enabl....
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....he Nucleus Device prepares itself for the software download by entering the Programming mode. It sends an "OK Response" once it is ready to receive the software. Step 3: The personal computer starts sending the Business Software and Data. The Nucleus Device receives the Business Software and Data and programs it into the Flash memory present in the Nucleus Device. Once the complete Business Software and Data is downloaded, the Nucleus Device sends the "Ok Response". Step 4: This is the last step that indicates to the Nucleus Device that it can exit the programme mode. This is done by sending the "End Download Command". The Nucleus Device responds by sending the "Ok Response". 4. Applicant has sought ruling on the following question....
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.... application that the Nucleus Device, prior to import would be embedded with basic input output system, enabling it to perform primary functions, such as processing of input commands and display of data. Further, it is Bluetooth enabled whereby it can connect with other authorized devices and the NFC (Near Field Communication) - for providing security and proximity functionality, can store information and transfer the information to another device. Thus, we agree with the applicant that the Nucleus Devices, as imported, are not incomplete or unfinished articles. 7. It is observed that as per Section 2(f) of the Central Excise Act, 1944, the term 'manufacture' is defined as under; 2. Definitions In this Act, unless there is anything....
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.... 2 (f) (iii) ibid is applicable only in respect of goods which fall under Third Schedule to the Central Excise Tariff Act, 1985. Nucleus Device classifiable under heading 8517 does not fall under said Schedule. It is observed from the submissions made by the Revenue that they have claimed that subject activity of loading of software into the Nucleus Device is manufacture but for this assertion, they have not invoked sub-clause (i), (ii) and (iii) of Section 2 (f) of Central Excise Act, 1944. However, said definition of manufacture is an inclusive definition and covers the processes which are commonly understood manufacture, as interpreted by the Courts. 9. Applicant submits that the Nucleus Device in the form in which it is imported and ....
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....ding of software into the Nucleus Device and would also continue to serve its functions. 10. Applicant submits that Chapter Note 7 to Chapter 85 was inserted in 1997 subsequent to the Hon'ble Supreme Court decision in the case of Prabhat Sound Studios Vs. Additional Collector of Central Excise reported at 1996 (88) ELlT 635 (S.C.) decided on 07.11.1996, which held recording of sound on magnetic cassette tapes or spool magnetic tapes as not amounting to manufacture; that it appears that since the Hon'ble Supreme Court had held the activity of recording on magnetic cassette tapes or spool magnetic tapes as not amounting to manufacture, the Chapter Note was inserted to deem the activity of recording of phenomena (including sound) on specifi....