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TMI Blog2011 (9) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... connectors etc. After ascertaining the comments of the concerned Commissioner, the application was admitted under Section 23D of the Central Excise Act 1944. The questions on which advance ruling is sought are:- Q.1 Whether the nature of activity is trading or manufacturing? Q.2 What is the excise classification for 'battery bank' assembled in a rack with connectors and can an excise invoice be raised for the clearance of 'battery bank'? Q.3 Can the imported VRLA batteries be charged in the bonded warehouse before being cleared from warehouse? Q.4 Can refund of SAD u/s 3(5) of Customs Tariff Act, 1975 be claimed? 3. During the course of arguments it was observed that the facts given by the applicant were inadequate to enable the Authority to give a ruling. The Departmental Representative further pointed out that the applicant is having manufacturing/distribution facilities at several places in the country apart from Chennai. In the circumstances the applicant was called upon to file an affidavit describing the entire range of operations connected with the batteries from the stage of their importation to their clearance for supply to their cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concerned Commissioner, in his comments on the application, has explained that as per the flow chart submitted by the applicant, it is importing two volts battery cells (electric accumulators) and the goods are classified under heading 85072000. The applicant procures the cabinet, base stand, metal connectors and clamps locally. They arrange 4 cells in a cabinet and such cabinets consist of 24 cells wrapped together to form a battery bank which is then placed on wooden pallets for convenience of transportation. The clamps and metal connectors are separately packed and sent along with the battery bank to their customers. According to the Commissioner, "though a commercial nomenclature has been given by the dealer as battery bank it is nothing but a cluster of batteries (electric accumulators - 85072000). As such there is no new product (that has) emerged but a cluster of a product handled in a specific arrangement and cleared. Hence it is opined that the activity and the goods under question is not a kind of manufacture but trading only". In his subsequent affidavit dated 12 th April, 2011, Commissioner has reiterated the activity undertaken by the applicant without any comments o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )] UOI vs Delhi Cloth and General Mill [1977 (1) ELT J199 (SC)] CESTAT's Final Order No. 815-817 dated 7/12/2010 in Xerox India Ltd. vs CCE, Meerut II. 8. The matter was heard afresh in view of the change in the constitution of the Authority. 9. The applicants explained the processes undertaken by them and stated that they now sought a ruling on questions 1 and 2 only, in relation to the activity undertaken by them at Chennai. 10. The D.R. reiterated the earlier submissions and argued that the test to be applied in adjudging whether or not the relevant processes amounted to manufacture was to consider if they resulted in the emergence of a product that had a different character, name and use. He submitted that in the case at hand the input was batteries and output was a battery bank, which had a distinct name, character and use. The process undertaken by the applicant was not merely cosmetic and what was supplied was different from what was imported. That both the inputs and the output were classifiable under the same tariff heading did not make any difference as held in CCE, Meerut vs Kapri International [2002 (142) E.L.T. 10 (S.C.)], nor di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as such. In other words, if by application of labour and skill an object is transformed to the extent that it is commercially known differently, it will suffice to say that manufacture has taken place for the purpose of Central Excise. The degrees of transformation and labour and skill spent are irrelevant. Therefore, the question of whether a particular process is a process of manufacture or not, has to be determined naturally having regard to the facts and circumstances of each case and having regard to the well known test laid down by the Supreme Court in various decisions. In Union of India vs. Delhi Cloth Mills [1977 (1) E.L.T. (J 199) (S.C.)] while dealing with the scope of "manufacture", the Constitution Bench of the Supreme Court quoted with approval the following passage from an American judgment:- Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use (emphasis added). In Ujagar Prints Etc. vs UOI and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with terminals for connection to an external circuit. In many cases the container may be subdivided, each subdivision (cell) being an accumulator in itself; these cells are usually connected together in series to produce a higher voltage. A number of cells so connected is called a battery. A number of accumulators may also be assembled in a larger container (emphasis added) It is clear from the above that the function and use of the batteries - whether in single units or in a bank of multiple batteries - remains the same and that is to supply power as per requirement. A battery bank would, therefore, appear to be nothing but a unit consisting of a number of cells connected in series or in parallel, to provide the required voltage and current requirements of the connected load. In other words, it is a number of batteries acting as one battery. The composition of a battery bank will obviously vary with the current and voltage requirement of the connected load. It cannot thus be argued that the process of putting two or more batteries would result in a transformation that alters the basic character and functions of batteries. Even from a classification perspective, the classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unction and use of the resultant product, i.e. battery bank is different from its constituents i.e. individual batteries. The function remains the same and it is to supply power of the required specifications. 16. The other cases cited mainly relate to the relevance of marketability as a criterion for determining whether a process or a set of processes amount to manufacture. It has been held that in order to qualify as excisable goods, the goods must be marketable i.e. they must be capable of being bought and sold. For instance, in Bhor Industries, it was held that crude PVC sheets/films used in the manufacture of adhesive tapes, insulating tapes and jute laminates could not be regarded as 'goods' for levy of central excise duty as it did not satisfy the test of marketability. Similarly, in Moti Laminates, it was held that phenol formaldehyde, arising in the course of manufacture of laminated sheets, could not be considered as dutiable goods as it had little or no shelf life and lacked marketability. Since the question of marketability is not at issue in the case at hand, one need not dwell on this aspect. 17. In another limb of his arguments, the Departmental Repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging). This cycle of operation, charging and discharging, can be repeated for the life of the accumulator. This process of charging cannot be said to result in the manufacture of an accumulator. 19. As described in the HSN notes, two volts battery is an accumulator and so also a number of batteries assembled in a larger container. The only difference is that in the case of a single battery it is of two volts and has specified capacity in terms of ampere hours. As a battery bank of 24 batteries, it has voltage of 48 volts and has a large capacity rating. It is true, as contended by the DR, that it is not necessary that tariff classification must change for a process to qualify as manufacture. However, the first point of determination has to be whether the process meets the tests laid down by the Supreme Court. We find that in the present case there is no transformation that brings about a fundamental change in the character and use of the goods. The name remains the same (i.e. accumulator, although an assembly of batteries is called a battery bank), the character and usage remain the same (i.e. provide direct current to an appliance though of differing magnitude etc.) Apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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