TMI Blog2023 (11) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... /S. SERVO-MED INDUSTRIES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (5) TMI 292 - SUPREME COURT] , it is held that the activity of mere packing of rechargeable batteries along with battery chargers and labelling the same as Eveready Rechargeable/Ultima and Uniross/Power Bank does not amounts to manufacture. Section 2(f)(ii) of the CEA, 1944 deems certain processes as amounting to manufacture, if there is a Section Note or a Chapter Note deeming the processes as amounting to manufacture. In the present case, neither under Section XVI nor under Chapter 85 there are any notes deeming activity of packing or repacking as amounting to manufacture. Further, in terms of Section 2(f)(iii) of the CEA, 1944 goods specified in 3rd schedule to the CEA, various processes like packing or repacking, labelling or relabelling is deemed to be the manufacturing process - the demand confirmed in the impugned order dated 02.12.2009 is not sustainable. Since the demand is not sustainable, the question of demanding interest and imposing penalty does not arise. The activity undertaken by the Appellant would not amount to manufacture as defined under Section 2(f) of Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken up together for decision by a common order. 3. The Appellant, M/s Eveready Industries India Ltd. are engaged in the manufacture of primary cells and primary batteries falling under heading 8506 of the 1st Schedule to the Central ExciseTariff Act, 1985. In addition to manufacture and clearance of the aforesaid goods on payment of duty, the Appellant was also engaged in trading of Eveready Recharge which is packed by a job worker, M/s The New Engineering Company, on behalf of the Appellant. In order to produce Eveready Recharge , the Appellant procures the following: unbranded battery chargers falling under tariff item 8504 4030 of the CETA, 1985 from small scale manufacturers, branded rechargeable batteries falling under tariff item 8507 3000 of the Customs Tariff Act, 1975 imported from China. various packing material such as blisters, blisters cards, 3-D holograms etc. 4. Thereafter, in terms of the contract with the job worker (M/s New Engineering Company, Howrah) the Appellant supplies all these items to them. The job worker in its own premises, using its own labourers undertakes the activity of packing the battery charger with 2 or 4 rechargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be decided in these appeals is whether the activity undertaken by the Appellants would amount to 'manufacture' or not as defined under Section 2(f) of the CEA, 1944. The word 'manufacture' is defined in Section 2(f) of the CEA, 1944, the relevant portion of the definition is extracted hereunder for the purpose of reference: manufacture includes any process, (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 First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) amounting to manufacture; or as (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re- labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not amounting to manufacture under the provisions of CEA, 1944: In Commissioner of Central Excise vs. M/s Sony Music Entertainment India Pvt Ltd, 2010-TIOL-46-HC-MUMCX, the Hon ble Bombay High Court was considering a situation where the Appellant imported recorded audio and video discs packed in boxes of 50 and after receipt of the said material in its factory, it packed each individual disc in transparent plastic cases known as jewel boxes, an inlay card containing the details of the content of the compact disc was also placed in the jewel box. The whole was then shrink wrapped and sold. In such circumstances the question arose whether the activity of packing imported compact discs in a jewel box along with inlay card would amount to manufacture under section 2(f) of the CEA, 1944. The Hon ble High Court by upholding the ruling of the Hon ble CESTAT held that the activity of packing does not amount to manufacture. [Ref to pg. no. 25 of the Compilation of Cases] Again, in Commissioner of Central Excise, Faridabad II vs. Kapoor Lamp Shade Company (Factory Shop), 2016-TIOL-962-HC-P H-CX, the Hon ble Punjab and Haryana High Court was dealing with a situation where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These processes cannot be said that it contributes for converting incomplete or unfinished goods to the complete and finished article for the reason that neither any further assembly is carried out norany mechanical process which make a unfinished goods or incomplete product into complete and finished product. Theproduct purchased by the appellant is already complete and finished. Merely a quality test, which is nothing but by connecting with the power plug for checking whether it is working or not but by this quality test there is no transformation of the product, which is already in the fully manufactured form, therefore all the electrical goods purchased by the appellant are completely in manufactured form, therefore in our considered view this so called activity of quality testing, branding and packing of the already manufactured goods will not be covered by Note 6 of Section XVI of the Central Excise Tariff, therefore we hold that the appellant is not engaged in the manufacturing of the goods, they are only doing trading activity of bought out goods . TI Diamond Chain Limited vs. Commissioner of C. Ex., Chennai II, 2000 (126) ELT 790 (Tribunal) maintained by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r packing of 2 or 4 rechargeable batteries along with charger in a blister packs and labelling them as Eveready Recharge/Ultima and Uniross/Power Bank . In terms of the agreement, M/s. Eveready Industries India Ltd. procure the following items: unbranded battery chargers falling under tariff item 8504 4030 of the CETA, 1985 from small scale manufacturers, branded rechargeable batteries falling under tariff item 8507 3000 of the Customs Tariff Act, 1975 imported from China. various packing material such as blisters, blisters cards, 3-D holograms etc. Thereafter, the aforesaid items were supplied to the Appellant. The Appellant in its own premises, using its own labourers undertook the activity of packing and labelling and supplied the same to the Appellant. An employee of M/s. Eveready Industries India Ltd. was posted on the premises of the Appellant to ensure proper checks and to coordinate dispatches. The department issued a SCN dated 29.05.2009 to M/s Eveready Industries Limited proposing to demand excise duty on that ground that the activity of packing of rechargeable battery along with charger and labelling the same amounts to manufacture under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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