TMI Blog2019 (2) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture by the Commissioner is that these containers are specific shapes and sizes of impugned items making them compatible with printers manufactured/traded by them. The impugned items are made as per fitment, which make them unique for their compatible printers only and hence the amounts to manufacture. From the provisions of section 2(f) defines the term manufacture in an inclusive manner which covers both the processes which are commonly understood as manufacture as well as the processes covered in the inclusive clause which are deemed to be manufacture - admitted position is that the items in question do not form part of Third Schedule of the Central Excise Act in section 2(f) (iii). We observed that the Commissioner have given finding that the containers are specialized containers which are specially designed for the purpose of a printer and hence the process of filling and labelling amounts to manufacture. We find that neither these containers nor the ink manufactured by the appellant, therefore, by merely undertaking the process of filling of ink/labelling of the containers which would enable the container to be used for printing. In the present case, filing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the extended period of limitation is not invokable. Penalty - Held that:- As duty confirmed against the appellant is not sustainable, therefore, the question of imposing penalty does not arise. Appeal allowed - decided in favor of appellant. - Appeal No. E/55352/2013-EX(DB), E/51943/2014-EX(DB) - FINAL ORDER NO.60155-60156/2019 - Dated:- 22-2-2019 - Mr. Ashok Jindal, Member (Judicial) And Bijay Kumar, Member (Technical) Shri B.L. Narasimhan Sh. Amarender Singh, Advocates- for the appellants Shri G.M. Sharma, AR- for the respondent ORDER Per: ASHOK JINDAL The appellant has filed these two appeals against the impugned order demanding duty alongwith interest and imposing penalty against the appellant. 2. The facts of the case in brief are that the appellant is engaged in the activity of manufacturing, trading of coding and marking equipment involving different types of technologies, inks and consumables, trading in spares and providing after sale service. The appellant have also undertaken the activity of ink refilling, relabeling and manufacturing facility in Manesar, Gurgaon where inks related to the coding and marking equipmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ink. Even after the refilling or labelling process was done as such, no distinct commodity comes into existence. It is further submits that method or manner of packing of the ink or using of ink would not in any case determine dutiability or otherwise of the ink. The sole contention of the department is that the containers are of specific size and shapes, therefore, by simply refilled/relabeling ink into these containers, it became the part of the machinery. If the said finding of the Commissioner however is taken as correct then empty containers were procured by the appellant is already of a particular shape and size and the appellant does not have changed the shape and size of the containers but simply refilled or relabelled the containers and such activity have no impact on size and shapes of the containers, therefore, it cannot be said that the appellant has undertaken a manufacturing process. It is also submitted that relabeling does not bring into existence a new commodity and doses not result in any change in nature or use or the character which remains the same irrespective of relabeling. It is his submission that the Commissioner has dropped the demand of duty on importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r more functions such as printing, copying of facsimile transmission. Further the machines in which the products are used, are not connected to an automatic data processing machine. 7. Learned Counsel further submits that in the impugned order the Commissioner held that main printing machine is classifiable under sub heading 8443 39 10 which refers to ink jet printing machine. Thus, the impugned order has classified the impugned order as parts and accessories of goods of sub heading 8443 39 i.e. under sub heading 8443 90 60. He submits that the goods are not per se to be known as parts and accessories of printers. These are containers containing ink to be used in printing machines. Although some of the impugned products described as cartridges have been designed to be inserted into printing machines, mere design for insertion into printing machines would not make these parts or accessories of printing machines. Further the essential character to the printing process is given by the ink and not the container thereof. Learned Counsel without prejudice submits that the Customs have allowed clearance of identical imported goods by accepting the classification of the items in questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCE vs. Mahavir Spinning Mills Ltd.-2001 (130) ELT 65 (Tri.-Del.) and Union of India vs. Delhi Cloth and General Mills Co.Ltd.-1977 (1) ELT J 199 (SC). 13. Learned Counsel submits that there are certain calculations errors while computing the demand against the appellant, therefore, the impugned orders are liable to be set aside. 14. On the other hand, learned AR appearing on behalf of the respondent opposed the contention of the learned Counsel and submits that the Commissioner has examined the issue in detail thereafter he observed that the activity of refilling undertaken by the appellant amounts to manufacture. Therefore, he submits that ink cartridges manufactured by the appellant is a new product distinct from the ink and empty container which are bought out products of the appellants. The cartridges having specific size and shape are classifiable under parts of printing machines under chapter heading 8443. This chapter heading is having specific entry for the type of cartridges manufactured by the appellants. The ink cartridges recognised in trade as a new distinct commercial commodity from the ink and/or ink in bulk containers. To support this contention, he relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elled. (e) Refilling from bulk to small packs of wash solution and labelling. (f) Relabeling of imported wash solution without involving any process of refilling. The original packing is only relabelled. 18. The appellant imported ink in bulk and also procured/purchased the containers locally from the third party. The ink is refilled/relabelled in these containers so purchased/procured. After this the ink is cleared as such. Whether this activity is amounts to manufacture? While going through the impugned order, we find that the Commissioner has observed that the containers are special type of containers and they are made such that they can be used machinery parts. In these circumstances, we have to see what types of the containers in dispute and what is use thereof. (i) Printing Ink Reservoir: Plastic moulded containers which have a quality code printed on it i.e. mathematical algorithm based number containing information on ink type, batch number and expiry date. The manifold assembly of the printer is simply fixed on the top of the reservoir after unscrewing the cap. The pump in the manifold assembly draws ink from the reservoir and supplies it to the printer head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible with printers manufactured/traded by them. The impugned items are made as per fitment, which make them unique for their compatible printers only and hence the amounts to manufacture. But the Commissioner has dropped the demand pertaining to refilling of ink to Jerry Can and Bag-In-Box as these products does not have any specific shape and size and are not fitted inside the printers and are only connected with the printers with tubes. Therefore, the Commissioner has classified the impugned items as parts and accessories of the goods of sub heading 84439 under sub heading 8443 99 60 but no such proposal was made in the show cause notice. Now have to see whether the activity undertaken by the appellant amounts to manufacture or not. The section 2 (f) of the Central Excise Act, 1944 defines manufacture as under:- manufacture includes any process, - (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of [the First Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransformation; a new and different article must emerge having a distinctive name, character or use. 21. We have seen that the appellant has procured the empty containers and does not manufacture such containers. The appellant is only and simply filled the empty containers with ink and no other activity undertaken as a result of process of refilling no new article comes into existence. Prior to undertaking such activity the product remained ink and even after undergoing the refilling activity remains ink. We find that admitted position is that the items in question do not form part of Third Schedule of the Central Excise Act in section 2(f) (iii). We observed that the Commissioner have given finding that the containers are specialized containers which are specially designed for the purpose of a printer and hence the process of filling and labelling amounts to manufacture. We find that neither these containers nor the ink manufactured by the appellant, therefore, by merely undertaking the process of filling of ink/labelling of the containers which would enable the container to be used for printing. 22. We have seen that the Hon ble Apex Court has examined the concept of manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ience, the said jumbo rolls are required to be cut into various shapes and sizes so that it can be conveniently used as table napkins, facial tissues, toilet rolls etc. However, the end-use of the tissue paper in the jumbo rolls and the end-use of the toilet rolls, the table napkins and the facial tissues remains the same, namely, for household or sanitary use. The predominant test in such a case is whether the characteristics of the tissue paper in the jumbo roll enumerated above is different from the characteristics of the tissue paper in the form of table napkin, toilet roll and facial tissue. In the present case, the Tribunal was right in holding that the characteristics of the tissue paper in the jumbo roll are not different from the characteristics of the tissue paper, after slitting and cutting, in the table napkins, in the toilet rolls and in the facial tissues. 13. In the case of Brakes India Ltd. v. Supdt. of Central Excise Others reported in [(1997) 10 SCC 717], this Court has very aptly brought out the test of character or end-use by observing as follows : If by a process, a change is effected in a product, which was not there previously, and which cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable. It undertook the same activity with carbon dioxide. The question for consideration in these appeals is whether such filling of the chemicals and the carbon dioxide into the extinguisher, either in the appellant s own hands or the premises of the customer, amounts to manufacture. In those set of facts, this Tribunal has obsessed as under: 4. It is not necessary for us to recount the judgment of the Supreme Court and other courts that manufacture necessarily requires the coming into existence of product that is distinctly different, with a different nomenclature, character and end use. None of these requirements in our view is satisfied by the activity carried out by the appellant. The appellant does not even undertake that the mixture of the chemical, it not being disputed that the sodium bicarbonate purchased by the appellant from elsewhere already contained in it the required quantity of China clay and other chemicals which are required to ensure its free flow and give it its characteristics of fire extinction. We are not required to answer the question whether such mixing amounts to manufacture. The simple process of packing this chemical mixture into the fire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the wax is being changed by the respondents in order to use it more conveniently and properly in their winding machines for waxing the sewing thread. They procure duty paid wax in lump form from the market, and after melting, transfer it in the moulds to get the shape of washers. The basic character of the wax remains the same and only new shape is given by them in order to use the same in the winding machine for waxing the sewing thread. No knew or different article or commodity is thus manufactured by them. The process adopted by them for changing the form of the wax from lump to washers cannot be equated to the process of manufacture keeping in view the test of manufacture laid down by the Apex Court in the above referred cases. Therefore, the impugned order of the Commissioner (Appeals) holding the product in question (wax washers) to be not dutiable being not a manufactured product is perfectly valid and deserves to be affirmed. 28. On the analysis of the above cited judgements, we find that the character, name and use of the printing ink does not change. Therefore, the process of refilling and relabeling which enables the products to be used with printing ink does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling/relabeling whether it amounts to manufacture or not. The Commissioner has proceeded to simply classify the impugned items and hold that as the items are classifiable under a particular sub heading the activity amounts to manufacture which is not in consonance with the levy provision. In the absence of any finding made by the Commissioner as regards how the activity of refilling/relabeling satisfies the test of manufacture no excise duty can be imposed. We also take note of the fact that there is no deeming provision of refilling amounting to manufacture as per chapter notes of Central Excise Tariff relating to impugned goods. Section 2(f) (ii) provides certain specified activities are deemed to be amounting to manufacture as set out in Section or Chapter Notes of the First Schedule to the Central Excise Tariff Act, 1985. The appellant has imported ink which was refilling in various containers as also the impugned items were imported and assessed under chapter heading 3215 of the Customs Tariff, which is pari material to the Central Excise Tariff and character, nature and use of the ink have admittedly not undergone any change and these remained classified under heading 3215 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready filled containers. The classification declared by the appellant was accepted by the department, therefore at this stage the same cannot be allowed to be classified the product under different sub heading. 35. We have also seen that the Commissioner has given finding qua sump chips has been applied across all the impugned items. The sump chip is to read only memory containing ink identity information and was affixed to old technology printers. The sump chip has no bearing on the ink filed into the reservoir as it merely is a repository of information regarding the ink filled into the container. Therefore, we hold that classification changed by the Commissioner is not sustainable. Accordingly, the issue No.2 is also answered in favour of the appellant. The issue No.3 36. We find that the imported ink container, the appellant has availed credit of CVD paid by them on the premise that the activity of refilling/relabeling. As discussed above, as per Chapter Note 7 to Chapter 32, the activity undertaken by the appellant does not amount to manufacture. Therefore, the appellant is not entitled to avail credit of CVD paid by them at time of import. But as per the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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