2000 (8) TMI 107 - AT - Central Excise

Summary

Issues Involved:
The issue in consideration is whether the activity undertaken by M/s. Eureka Forbes Ltd. amounts to manufacture in view of Note 6 of Section XVI of the Schedule to the Central Excise Tariff.

Circumstances Leading to Reference:
Eureka Forbes purchased water filter-cum-purifier from its subsidiary and packed it with other accessories. The dispute arose regarding whether the bought-out items made the equipment complete or if the water filter and purifier purchased were already complete apparatus.

Interpretation of Notification and Tribunal Decisions:
The subsidiary company, APIC, claimed exemption under a notification for water filters, but the Revenue argued that the equipment was not just a filter but also a purifier. Previous Tribunal and Supreme Court decisions supported that water filters alone were eligible for the exemption. The Supreme Court confirmed that the equipment in question was a filter and purifier, dismissing the appeal.

Application of Note 6 to Section XVI:
The Revenue contended that the equipment purchased was incomplete and became complete only with the addition of the bought-out items, citing Note 6 which defines conversion of incomplete articles into complete ones as manufacture. However, reports from laboratories showed that the equipment functioned effectively both with and without the additional prefilter.

Laboratory Reports and Conclusion:
The laboratory reports demonstrated that the equipment filtered and purified water effectively even without the prefilter. The equipment was found to be complete in itself for filtering and purification purposes. The Tribunal concluded that the equipment was already complete and the addition of bought-out items did not change its essential nature. Therefore, the appeals by the assessee were allowed, and the Department's appeal was dismissed.