TaxTMI 
TaxTMI 
2002 (11) TMI 108
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....nners (ten numbers of combison-320-5 Spec. No. 1 and thirty-five numbers of combison-320-5 Spec. No. 2) which were then to be exported. The appellants in Civil Appeal No. 4693 of 1995 i.e. M/s. Titan Medical Systems Pvt. Ltd. were shown as supporting manufacturer. 3.By exemption Notification No. 116 of 1988, certain goods, which were imported into India against an advance licence for the purpose of manufacture, in execution of an export order, were exempted from duty of customs. M/s. Nicolian Brothers imported certain components into India vide Bill of Entry dated 25th March, 1989. They then exported, out of India, forty-five Ultrasound Scanners (ten of which were of specification No. 1 and thirty-five of the specification No. 2). The Cust....
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....s. 8 lakhs and paid approximately only Rs. 5 lakhs towards labour charges. It is also held that neither M/s. Nicolian Brothers nor M/s. Titan Medical Systems Pvt. Ltd. had undertaken any manufacturing activity at all. 6.We have heard the parties at great length. We have perused the exemption notification, the duty exemption scheme and the relevant portions of the Import Policy. We have also perused the application for licence and the licence which had been granted to the parties. 7.The relevant portion of Paragraph 219 of the Duty Exemption Scheme reads as follows : - "219. (1) The objective of the scheme is to make available to the Registered Exporters the necessary inputs for export production at international prices without payment of....
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....nvolve substantial manufacturing activities." 9.The relevant portions of the exemption notification read as under : - "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 44/87-Customs [C.S.R. 101(E)] dated the 19th February, 1987, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods imported into India against an Advance Licence issued under the Imports (Control) Order, 1955, being materials required to be imported for the purpose of manufacture of products (hereinafter referred to as the resultant prod....
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.... just the resultant product (which has to be exported) but a substantial amount of components or materials which go into making of the resultant product must also be manufactured by the party. It was submitted that the appellants should have manufactured components to the extent as in their application that the components i.e. to the tune of Rs. 2,32,69,200/-. It is submitted that the appellants have used components of only of the value of approximately Rs. 8 lakhs. It was further submitted that the appellants had merely assembled the scanners out of components, imported by them along with some Indian components. It is submitted that, therefore, it cannot be said that any manufacturing activity has taken place. In these words of the Tribuna....
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....ay be the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes such a process which will be part of 'manufacture'. Any process or processes creating something else having a distinctive name, character and use would be manufacture." 12.Thus, it is clear that ultrasound scanners have been manufactured. The further submission is that manufacture in the ordinary sense is not enough but that there must be "substantial manufacture". It is submitted that the term "substantial manufacture" necessarily implies that not only the final product but a substantial amount of its components must also be manufactured by the party. We are unable to read any such requi....