2016 (8) TMI 390 - AAR - Central Excise

Whether the process of crushing of coal would amount to manufacturing activity - Held that - by considering the language of the section, the activity of crushing the coal would not be covered in the definition of manufacture . All that the applicant would be doing, would be crushing the coal of different size. However, it is well understood that even after crushing the coal, the coal will not lose its character nor it will be a new product. Therefore, the activity could not be covered as a manufacturing activity nor the crushed coal could be manufactured product. - Decided in favour of assessee

Summary

Issues:
- Determination of whether the process of crushing coal amounts to manufacturing activity under the Central Excise Act, 1944.

Analysis:
The case involved an application by a public limited company engaged in the manufacture and sale of PET Chips, intending to import coal, crush it, and supply it to customers. The main issue was whether the activity of crushing coal would constitute manufacturing under the Central Excise Act. The definition of "manufacture" under Section 2(f) of the Act was crucial in this analysis, which includes processes incidental to product completion, those specified in the tariff act, and those involving packing, labeling, or treatment to make goods marketable.

Upon examination, the Authority for Advance Rulings concluded that crushing coal does not fall within the definition of "manufacture" under the Act. Despite the activity of crushing coal, the nature and characteristics of coal remain unchanged, and it does not result in a new product. Therefore, the activity of crushing coal cannot be considered a manufacturing activity, and the crushed coal cannot be classified as a manufactured product under the Act.

The Revenue did not strongly argue that the activity would be covered under the Central Excise Act. While the Excise Commissioner suggested it might fall under the category of "service," the ruling focused solely on whether coal crushing constituted manufacturing. Ultimately, the Authority held that coal crushing does not amount to manufacturing activity as defined by the Act. Consequently, the application was decided in favor of the applicant, and it was disposed of accordingly.