TMI Blog1998 (8) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules. 2. The appellants are traders of components of Cable Jointing Kits. They are recognised Kitters approved by the Department of Telecommunication (DoT), New Delhi. In order to become the Kitter, the appellants stated that they should possess an in house testing facilities. Components received from the various sources are tested at random. A cable jointing kit consist of 17 different components such as heat shiinkage sleeve, aluminium canister, filling compound, sealant tape, emery strip, cleansing kit, cleansing tissue, branche off clip, sheath connector assembly, adhesive aluminium strip, transparent PE Steel, adhesive PVC tape, polyester tape, armour continuity wire, packing box and installation instruction booklet, etc. supplied by the P T Department. After random testing the components are packed in a corrugated box along with a instruction booklet as published/approved by DoT. The Department has proceeded by show cause notice No. 60/97 dated 9.5.1997 alleging that the different components that go into the Kit are individually tested with the help of different testing equipments as prescribed by DoT's specification. Components which pass the testing are taken int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es invoking various provisions of CE Rules to call upon them to explain why penalty should not be imposed against them. 3. It is the contention of the appellants that the activity of packing in a common carton which is more convenient cannot be construed as manufacture. They also contended that the judgment of the Bombay High Court in the case of Excel Telecom (P) Ltd. v. UOI relied upon by the department in the Board's Circular dated 27.3.1997 was not applicable in their case since the same was dealing with a customs case where concept of manufacture was not relevant. They stated that the demands had been alleged on the basis of the CBEC Circular dated 27.3.1997 and the Commissioner of Central Excise, Chennai vide his communication dated 2.6.1997 had sought for reconsideration of the above said circular and had also sought for keeping the matter pending. It is stated by them that Commissioner while so keeping the matter pending, immediately sought for hearing on 31.10.1997 and despite resistance from the appellants, proceeded to hear and dispose of the matter holding the item to be classifiable and dutiable. It is their contention that they had also challenged the matter in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court's judgment, yet he would reiterate the departmental view that such an activity would amount to process of manufacture. In this regard he pointed out to the ruling of the Commissioner and the judgments relied by him, more particularly with regard to the ratio of the judgment of M/s. Pressure Cookers and Appliances Ltd. v. CCE as , wherein also in a similar situation, it was held that putting of different parts together after testing would bring into existence of a new product. He submits all these items are required to be tested and only after they are tested they are put in a kit and therefore, such kit is required to be considered as a separate identical commodity having separate name, character and use and it is recognised as a separate commodity in the market. Hence the classification of the goods is required to be upheld. 6. Ld. Advocate submits that it was the trade practice not to consider such a composition of items in a separate container to be new goods and the appellants were carrying on such a bona fide belief of the item not being goods. Even the department held such a view is clear from the Board's Circular dated 27.3.1997. The Circular itself c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is change, the change should result in bringing into existence a new and definite article having a distinctive name, character or use and the said article must be marketable and it should be known to the market as such. In the absence of any one of the ingredients referred to above, the provisions of the Act are not attracted and no excise duty is leviable. Even if the goods so produced were excisable goods mentioned in the schedule, they cannot be subjected to duty unless they are marketed or capable of being marketed. The marketability is one of the principle test in determining the liability to excise duty. In addition the product which is brought into existence must have a distinct identity in the commercial world. Let us apply the above tests to the facts of the present case. As pointed out in the earlier paragraph, the identity of the items placed in the kit is not changed. They are known in the market as such. There is no transformation in the articles which are placed in the kit. They are marketable as such. Further, no process is also involved except that all the articles are put together in one box. It is true that by placing all these articles in one kit the kit ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise duty on cable jointing kits. The argument of the learned Counsel for the Revenue is that the circular was issued in exercise of the power conferred under Section 37B of the Act are not binding on the Central Excise Officers of the discretion of the Collector of Central Excise (Appeals) in exercise of his appellate functions and therefore, the apprehension of the petitioners that the Collector of Central Excise (Appeals) would be following the circular issued by the 5th respondent, is baseless, cannot also be countenanced as this argument is inconsistent with the first argument of the learned Counsel for the Revenue, as he contended that placing the articles in one kit and packing them amounts to manufacture. Further, as pointed out in the earlier paragraphs, the assessee need not be subjected himself to the authority which has no jurisdiction over him or when the authority is attempting to exercise jurisdiction without authority of law. Therefore, the argument of the learned Counsel for the Revenue is rejected. In any view of the matter the action of the respondents is without authority of law and jurisdiction and hence the petitioners are entitled to succeed and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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