TMI Blog2011 (9) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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.) - activities performed at the Chennai facility of the applicant in respect of imported battery cells as described in para 4 cannot be said to amount to "manufacture" under Section 3 of the Central Excise Act, 1944 - AAR/07/CE/2011 - - - Dated:- 30-9-2011 - Y.G. Parande, P.K. Balasubramanyan, JJ. Ravi Gupta, Manager for the Applicant Sumit Kumar, SDR for the Commissioner RULING Y.G. Parande:- 1. M/s Delta Power Solutions India Pvt. Ltd., the applicant, is a wholly owned Indian subsidiary company of a foreign company M/s DET International Holdings Limited, Cayman Island and DET Video Technology Ltd., Tortola, British Virgin Islands. The applicant has filed an application under Section 23 C of the Central Excise Act, 1944 seeking an advance ruling regarding its liability to pay excise duty in respect of operations performed by it on battery cells for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a kind of lever press) into the cabinets of mechanical shelves. Each shelf contains 4 cabinets and six shelves constitute the containers for the battery bank of 24 battery cells. The batteries are not connected and such connections are made by the customer at the site itself. A battery bank of 48 volts consists of:- 1. 6 mechanical shelves having capacity to insert 4 battery cells in each shelf. 2. 24 battery cells (2V each). 3. Bus bars and connectors. 4. Accessories (screws, connectors, cover, etc.). 5. Packing material i.e., wooden pallet, corrugated boxes, etc. 5. The process of connecting in series the various batteries is simple, without the use of any sophisticated device. It is the contention of the applicant that the manner of clearance of battery cells as aforesaid does not bring into existence any new manufactured product and hence it is not liable to pay any excise duty in respect of the processing undertaken by it. According to the applicant, it is engaged in a process of purchase and sale of batteries and hence required to take registration as a central excise dealer. The applicant also requested that it is primarily interested in a ruling on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived therein; therefore, as per the law laid down by the Apex Court, it is a new product. Series of activities taking place in the bonded warehouse result in the manufacture of a new product. Further, the applicant is undertaking manufacture in its Rudrapur factory and batteries are subjected to the same processes as in Chennai and it has been held as amounting to manufacture. Even the process of charging will also result in a product with a different name, character and use compared to the imported product. The goods cleared from the non-bonded portion of the warehouse are not what is received on payment of Customs duty from the Customs bonded warehouse and is a new product as per law laid down by the Apex court. The DR has therefore concluded that the activities in question may be termed as "manufacture". He relied upon the following judgments in support of his contention:- India Cine Agencies vs Commissioner of Income Tax, Madras [2009 (233) ELT 8 (SC)] Kores India Ltd. vs CCE, Chennai [2004 (174) ELT 7 (SC)] Sirpur Paper Mills vs CCE, Hyderabad [1998(97) ELT 3 (SC)] UOI vs. Delhi Cloth Mills [1997 (92) ELT 315 (SC)] Moti Laminates vs CCE, Ahmedabad [1995 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther of the batteries into a "battery bank", by the process summarized in para 4 above, can be said to result in a product that has a different character, name and use, thus qualifying it to be called manufacture. 12. The question as to what constitutes manufacture has received judicial attention in a large number of cases, some of which have been listed above. The essence of the definition of manufacture, as has been held by the Supreme Court, is that for a process to be called "manufacture", it must result in a transformation of the material worked upon into a new product that has its own character, name and use as commercially understood. Further, there cannot be any hard and fast rule and the determination must be made having regard to the facts and circumstances of each case. In Empire Industries vs. UOI [1985 (20) ELT 179 (SC)] the Supreme Court made the following observation:- To constitute manufacture it is nor necessary that one should absolutely make out a new thing because it is well-settled that one cannot absolutely make a thing by hand in the sense that nobody can create matter by hand, it is the transformation of a matter into something else and that somethin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant has a name, character and use which is distinct from the batteries that comprise it. It is undisputed that the applicant describes the item as battery bank and that is the name under which it is sold. The expression "battery bank" appears to refer collectively to a battery assembly. Let us also see if there is any change at all in the character and use of the batteries. The item that is worked upon is a battery cell (technically called an accumulator) classifiable under heading 8507 of the Schedule to the Central Excise Tariff Act which covers "Electric accumulators including separators therefor, whether or not rectangular (including square)". After completion of the operations carried out on the item what is cleared from the "factory" is the same battery cells (accumulators) - but arranged in mechanical shelves. The connectors, clamps, bus bar and other such materials are cleared as such. McGraw Hill Dictionary of Technical Terms (Fifth edition) defines battery to mean a direct-current voltage source made up of one or more units that convert, inter alia, chemical energy into electrical energy. Similarly, the Explanatory Note to heading 8507 covering electric accumul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the erection of paper making machinery by using some duty paid bought out and some locally fabricated components amounted to manufacture as the machine was a new marketable commodity that was something different from the components that went into it. The machinery thus had character and functions quite distinct and different from its constituent components. In the Coco fibres case, the question was whether the conversion of green coconut husk into coconut fibre amounted to manufacture. The Court, after considering the process, held that fibre was a commodity distinct from husk, recognized as such in commercial parlance and therefore the process amounted to manufacture. Here again the transformation resulted in a product which had a distinct name, character and use. In the Xerox case, the question was whether assembly of photocopiers and printers from components amounted to manufacture. The Tribunal answered this question in the affirmative. It noted that it was not the case of the appellants that the modules or the parts imported could themselves be used as copiers or printers and it was only upon the assembly of the imported modules and parts along with indigenous parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered as an incomplete or unfinished article; it is fully finished and capable of being used as such for application requiring a two volts charge with the specified capacity (Ah-ampere hours). That two or more batteries might be joined into a battery bank does not make any difference to this conclusion. Therefore, going by the examples set out in the explanatory notes and the purpose for which note 6 was inserted, conversion of battery cells into a battery bank cannot be deemed to be "manufacture" for purposes of levy of excise duty. 18. The Departmental Representative has also contended that the process of charging the batteries itself amounts to manufacture. He has not provided any justification or explanation for such an averment. In the case before us the batteries are already charged, only in cases where the quantum of charge dips below a certain level, a battery needs to be partially re-charged. The accumulators (storage batteries) are used to store electricity and supply it when required. A direct current is passed through the accumulator producing certain chemical changes (charging); when the terminals of the accumulator are subsequently connected to an external circuit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
