9911796707
TMI Blog2009 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... trical cables so manufactured and cleared by it for home consumption. With a view to supplement its existing manufacturing capacity, the applicant has proposed - (a) to procure from other manufacturers electrical cables in running length packed in large spools, (b) to rewind such cables and cut them into cables of standard length, (c) to subject such cables to quality test to check whether the cable meets the standards / specifications and (d) to pack the cables, after cutting, in small cartons/packages for delivery to customers 2. The applicant has sought a clarification whether the aforesaid activity proposed to be undertaken by it would amount to "manufacture". The application for advance ruling was admitted under Section 23 D(2) of the Central Excise Act, 1944 and the question for ruling is as follows: "Whether the activity of cutting specified varieties of cables received by the applicant into prescribed lengths, testing thereof and packaging amounts to manufacture in terms of clause (f) of section 2 of the Central Excise Act, 1944 read with note 6 of Section XVI of the First Schedule to the Central Excise Tariff Act, 1985?" 3. During the course of hearing, it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring, on a specific query being raised, it has been stated on behalf of Revenue that mere cutting of cables in running length, subjecting them to test and packing them in smaller packs would not amount to manufacture. 6. The question that needs to be answered is whether the activity of cutting specified varieties of cables received by the applicant into prescribed lengths, testing and packaging thereof amounts to "manufacture" in terms of clause (f) of Section 2 of the Central Excise Act, 1944 read with note 6 of Section XVI of the First Schedule to the Central Excise Tariff Act, 1985. Clause (f) of the said Section (2) of the Excise Act, reads as follows: (f) "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; (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled flats does not amount to manufacture (Computer Graphics Pvt. Ltd Vs Union of India) (iii) CESTAT, Bangalore Bench has held that mere cutting the sheets which are already known as "Scrotch Brite Scouring Pad/Scrub pad" and which has got the abrasive does not bring about a change in the character of the item. No new product has arisen on mere cutting of the item into small pads. (Birla 3 M and Another Vs Commissioner of Central Excise). (iv) CESTAT Mumbai Bench has held that cutting of pipes to the required length does not change the character or classification and hence does not amount to manufacture (EPC Irrigation Ltd Vs Commissioner of Central Excise, Aurangabad). (v) The Supreme Court has held that mere cutting (of industrial laminates) or punching holes so that they may fit into the electrical instruments/appliances does not amount to manufacture.(Collector of Central Excise, Hyderabad Vs Bakelite Hylam Ltd). (vi) However, the Supreme Court held in the case of Kores India Ltd Vs Commissioner of Central Excise, Chennai6 that cutting of jumbo rolls of typewriter/telex rolls wound/spooled on the metal spools and blister packed would amount to manufacture. 10. In the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the length by cutting. The product becomes a saleable commodity in the market only when it is spooled according to the desired sizes which is suitable to the particular model and make of the machine. Hence the product which emerges after spooling and packing namely a typewriter /telex ribbon has acquired a new and distinct identity from the jumbo rolls, which has now become a specific commodity namely typewriter/telex ribbons in spools of specified lengths". The Hon'ble Supreme Court has affirmed the factual findings recorded in this case by observing that the processing resulted in coming into existence of a commercial product having distinct name, character and use. Apart from the difference in facts, the Section Note in the present case (which will be discussed hereinafter) also makes the ratio of this decision inapplicable. In the case of applicant no doubt cables of running length are cut into standard lengths. However, it is nobody's case that without such cutting, the cables cannot be put to their intended use. Unlike in the case of typewriter ribbons which necessarily have to be in spools of specified shape to be inserted in different models of various brands of typewrite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to be sold to the consumers and this makes the electric cables in running length as incomplete and unfinished. We are unable to be persuaded to agree with the interpretation of the applicant in this behalf. These cables after being cut into lengths of 100 mts, 300 mts or 500 mts. would, if so required, be further reduced in length by the customers to suit their specific needs. Length of the cable especially when the minimum unit is in hundreds of metres, therefore, is not a relevant criterion to render the electric conductor of heading 8544 60 90 as an incomplete or unfinished article. In this view of the matter the cables in running length obtained by the applicant for cutting cannot be identified as incomplete or unfinished articles. Since the basic requirement of note 6 of its being applicable to incomplete or unfinished articles is not fulfilled, the said note 6 cannot be invoked to bring the process of cutting electric cables into shorter length, testing and repacking as amounting to manufacture for the purposes of levy of excise duty under Central Excise Act, 1944. 13. We may in this context refer to some examples given in the Explanatory Notes to the Harmonized Syste ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
