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M/s. Nucleus Software Exports Ltd, New Delhi Versus Commissioner of Central Excise, Noida

2016 (8) TMI 388 - AUTHORITY FOR ADVANCE RULINGS

Whether the activity of loading of business software in the Nucleus Device by the applicant constitutes manufacture under the Central Excise Law - Held that:- we are in agreement with the applicant that up-loading of software into the Nucleus Device, which is already embedded with the basic input output system to perform primary functions will not result in new and different article having a distinct name, character or use. Further, the original commodity i e, Nucleus Devise proposed to be impor .....

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Chapter 85 would have included goods of heading 8517, deeming such activity to be manufacture. Therefore, the activity of loading of business software in the Nucleus Device by the applicant will not constitute manufacture under the Central Excise Law. - Decided in favour of applicant - Ruling No. AAR/44/CE/ 18 /2016 In Application No. AAR/44/CE/24/2015 - Dated:- 15-7-2016 - Justice V.S. Sirpurkar (Chairman), Shri S.S.Rana and Shri R.S.Shukla, JJ. For The Applicant : Shri B.L.Narasimhan, Advocate .....

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he 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 enabling it to perform pri .....

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oading software and charging the battery. The business software and data would be loaded into the device using the Software Download, Battery Charger Adapter. Under this procedure, the business software and data would be downloaded into the Flash memory of the Nucleus Device. The Personal Computer (PC) sends the commands to download the software to the Nucleus Device via the USB cable. Before the downloading process, the Nucleus Device needs to be connected to the PC via the Software Download, B .....

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are 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 .....

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ich device would not function as a cashless currency transmitting apparatus and loading of software involve process of manufacture; that Nucleus Device and software are different and distinct goods under the Central Excise Act having been classified differently; that loading of software converts the hardware manufactured into functioning Nucleus Device and this process amounts to manufacture. Revenue relying on the order of Tribunal in case of NCR Corporation India Pvt. Ltd. vs. Commissioner of .....

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that loading of software on the Nucleus Device would amount to manufacture since device would not function without it, is factually not correct. Applicant has clearly mentioned in the 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 Com .....

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i. incidental or ancillary to the completion of a manufactured product; and ii. Which is specified in relation to any goods in the Section or Chapter Notes of the Schedule I to the Central Excise Tariff Act, 1985 as amounting to manufacture; or iii. Which in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labeling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption o .....

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of the First Schedule to the Central Excise Tariff Act, 1985 specify certain processes as amounting to manufacture, then also, those processes would be treated as manufacture. No section or chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 treat process of recording of sound or data or other phenomena of product of heading 8517 as amounting to manufacture. Furthermore, Section 2 (f) (iii) ibid is applicable only in respect of goods which fall under Third Schedule to the .....

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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 post uploading of software has essentially the same name, character and use. The character, usage and identity of the Nucleus Device on loading of software remain the same. Therefore, loading of business software would not ipso facto amount to manufacture in the scope of its natural meaning as interpreted by the Courts. In this regards, applicant .....

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ure. The first is whether by the said process, a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist. The second is whether the commodity already in existence will serve no purpose but for the said process. We are in agreement with the applicant that up-loading of software into the Nucleus Device, which is already embedded with the basic input output system to perform primary functions will not result in new and different article .....

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1.1996, 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 specific goods under the erstwhile heading 8524 (present heading 8523 and Chapter Note 10) as manufacture. A .....

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