2009 (12) TMI 139 - HC - Central Excise

Manufacturer- 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 Central Excise Act, 1944? Held that- The Tribunal has rightly concluded that the activities carried out by the respondent does not amount to manufacture since the compact disc were complete and finished when imported by the assessee. They were imported in finished and completed form. In the above view of the matter, the question framed is answered against the revenue and in favour of the assessee.

Summary

Issues:
Whether packing imported compact discs in a jewel box with an inlay card amounts to manufacture under Section 2(f) of the Central Excise Act, 1944.

Analysis:
The case involved the appellant, who was engaged in marketing recorded compact discs, importing recorded audio and video discs packed in boxes of 50. The appellant then packed each disc in transparent plastic cases (jewel boxes) along with an inlay card detailing the disc's content and shrink wrapped the whole package for wholesale distribution. A show cause notice alleged that this process constituted manufacturing, which was confirmed by the adjudication authority but challenged by the appellant.

The Customs, Excise and Service Tax Appellate Tribunal, West Regional Bench at Mumbai, examined the case and noted that the appellant's activities did not amount to manufacturing. The Tribunal referred to Note 6 to Section XVI of the tariff, which states that converting an incomplete article into a finished one constitutes manufacturing. However, in this case, the imported compact discs were already complete and finished products capable of being used without further processing. The Tribunal emphasized that the mere packing of the discs did not change their finished nature, leading to a ruling in favor of the appellant.

Upon reviewing the Tribunal's decision and the original order, the High Court found no fault with the Tribunal's conclusion. The Court agreed with the Tribunal that the appellant's actions did not meet the criteria for manufacturing under the Central Excise Act. Since the compact discs were fully finished upon importation, the Court upheld the decision that the appellant's activities did not amount to manufacturing.

In conclusion, the High Court disposed of the appeal in favor of the appellant, with no costs imposed. The judgment clarified that the process of packing imported compact discs in jewel boxes with inlay cards did not constitute manufacturing under Section 2(f) of the Central Excise Act, 1944, as the discs were already complete and finished products when imported.