TMI Blog2023 (6) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... n regard to whether at all the petitioner has added any components to the imported valves. While it has been consistently representing to the authorities that it has been fitting indigenously procured actuators and gear-boxes to the valves, the authority has, in the impugned order, pointed out that there is a declaration in Form ANF 4A of the Advance Authorisation confirming that the petitioner has not procured any indigenous items for the export product - Even in the writ affidavit, the petitioner has maintained that it has been procuring indigenously procured items for the process of manufacture. One approach is to state that even without such procurement and additions to the imported valves, the processes of testing of the valves prior to final supply would suffice to satisfy the definition of manufacture under Clause 9.36 of the Exim Policy. The Karnataka High Court in Commissioner v. Hewlett Packard India Sales (P) Ltd [ 2011 (4) TMI 1281 - KARNATAKA HIGH COURT] has held that the process of testing, repacking and re-labelling of imports would satisfy the definition of manufacture under the Foreign Trade Policy. The matter remanded to the file of Respondent 1, to be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valves undergo various processes in the petitioner s factory including the fitting of indigenously procured actuators, gear boxes and subsequent assembly. 7. Thereafter, there is a process of hydro testing and re-assembling to meet the standards specified by the customers. It is only at this stage that the manufacturing process will attain completion and the valves would be offered to the customers for inspection and confirmation. 8. According to her, it is only these processes, fitting of the actuators and switches, testing and inspection to test compliance with customer specifications that render the valves commercially fit to use. My attention is drawn to the expansive definition of manufacture under the Exim policy that includes processes such as testing . Reference, in this context, is made to several judgments of the Hon ble Supreme Court for the proposition that when the meaning of term used is clear, the interpretation must be as expressed in the statute. 9. Per contra, the respondents represented by learned Additional Solicitor General and Mr. V. Chandrasekaran would point out that the petitioner had suffered three orders that concurrently rejected their conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the goods supplied have been manufactured in India. 16. The term manufacture has been defined in Clause 9.36 to read thus: 9.36 Manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, Re-conditioning repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining. 17. The terms of purchase refer, in Article 2 to the scope of supply, which is inclusive of packing and forwarding, as per the requirements and technical specifications of the purchaser/client. The technical specifications were called for which learned counsel for the petitioner states, are unavailable. Be that as it may, Article 2 makes it clear that the processes of testing for compliance with technical specs is mandatory. 18. Clause 13 of the purchase order requires the petitioner to carry out Performance Gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. Inspection Expediting Stagewise / Final Inspection of critical items / equipments (list of which will be mutually drawn) and expediting shall be carried out by Purchaser / Client or a third party, who have right to carry out inspection of the equipment other than equipment falling under Indian Boiler Rules Regulations which will be inspected by the statutory authorities at Suppliers work site. The Supplier shall inform the Purchaser minimum 7 days in advance by fax/e-mail regarding readiness of inspection. The Purchaser / Client will either give waiver in writing or carry out the inspection on the appointed date, failing which Supplier will be free to proceed and dispatch the material. However inspection and acceptance of items / materials or waiver of inspection shall not absolve Suppliers obligations under this order. While carrying out inspection of the equipment at Suppliers work site, Supplier will extend all co-operation and not charge any amount towards the cost of manpower and related ***** incurred by Supplier during inspection. Approval and inspection by statutory authorities, wherever necessary, shall be arranged by the Supplier at his cost. Whenever req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a related person would also include, apart from those entities covered in the initial part of the definition, a holding or subsidiary company, a relative and a distributor or sub-distributor of the assessee concerned. Such a deeming fiction was necessary to lift the corporate veil and reach the economic realities of who constituted a relative person. 24. In this case, the deeming fiction by inclusion of various activities in the latter portion of the definition of manufacture, is clearly to expand the ambit of manufacture . By including processes such as refrigeration, re-packing, polishing, labelling, re-conditioning repair, remaking, refurbishing, testing, calibration and re-engineering within the ambit of manufacture itself, the legislature clearly intended an expansive understanding of what constituted manufacture for the purposes of deemed export . This becomes necessary for the reason that such processes would not normally be understood to connote manufacture in the absence of such a deeming fiction. 25. In Commercial Taxation Officer v. Rajasthan Taxchem Ltd. 2007 taxmann.com 1786 (SC)[12-01-2007] also, the Hon ble Supreme Court arrived at a similar conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that there is a declaration in Form ANF 4A of the Advance Authorisation confirming that the petitioner has not procured any indigenous items for the export product. 31. Even in the writ affidavit, the petitioner has maintained that it has been procuring indigenously procured items for the process of manufacture. One approach is to state that even without such procurement and additions to the imported valves, the processes of testing of the valves prior to final supply would suffice to satisfy the definition of manufacture under Clause 9.36 of the Exim Policy. 32. In fact, the Karnataka High Court in Commissioner v. Hewlett Packard India Sales (P) Ltd (316) ELT A32 (Kar.) has held that the process of testing, repacking and re-labelling of imports would satisfy the definition of manufacture under the Foreign Trade Policy. The relevant portion of the decision reads thus: The Appellate Tribunal in its impugned order had held that appellants, 100% EOU had carried out export of imported goods as such without subjecting to any manufacturing process. Goods imported under Notification No. 52/2003-Cus., are subjected to testing and re-labelling before export. Such proces ..... X X X X Extracts X X X X X X X X Extracts X X X X
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