TMI Blog2009 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... Lapp India Pvt. Ltd., Bangalore, the applicant, is a 100% subsidiary of M/s Lapp Holding Asia PTE Ltd., Singapore. The applicant is engaged in the manufacture and sale of electrical cables classifiable under tariff item 8544 60 90 of the Central Excise Tariff. The applicant has been paying excise duty on electrical 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, in his subsequent comments forwarded vide letter dated 12th October, 2009, the Commissioner has observed that the applicant has not placed any material on record which can help in ascertaining as to whether the goods (cables in running length) are incomplete/unfinished or complete/finished. During the course of oralhearing, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper/aluminum foil into smaller sizes, does not amount to manufacture as the characteristic of the product before and after processing remains the same (Commissioner of Central Excise, New Delhi vs. SR Tissues Pvt. Ltd.) (ii) Madras High Court has ruled that the process of cutting of jumbo rolls of graphic art films into sheets of various sizes called 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as are known to the market". Conversion of jumbo ribbons into spool form is as per requirement of consumers in different spools to suit typewriter machines like Godrej M-12, Remington Standard, Halda Standard etc. The CESTAT further observed that "ribbons in the form in which they are received cannot be supplied to the various customers by merely reducing 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 inapplic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassified under item 8544 60 90 of the Central Excise Tariff as "electric conductor". In the facts before us, it has not been explained how this is an "incomplete or unfinished" article. The applicant has submitted that the cables in running length are of no use to the customer as such these need to be cut into standard lengths (of 100 mts, 300 mts or 500 mts) in 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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