1999 (5) TMI 155 - AT - Central Excise

Summary

Issues Involved:
1. Whether the activity of packing various parts of "Milk Care Designer Feeder" after sterilization amounts to manufacture u/s 2(f) of the Central Excises & Salt Act, 1944.
2. Classification of the said product under the Central Excise Tariff Act, 1985.
3. Entitlement to the benefit of Notification No. 14/92-C.E., dated 1-3-1992 as amended.

Summary:

Issue 1: Whether the activity amounts to manufacture:
The main issue was whether the process of assembling and packing different parts of feeding bottles after sterilization constitutes "manufacture" u/s 2(f) of the Central Excises & Salt Act, 1944. The appellants argued that their activity did not amount to manufacture as it involved only packing and sterilization, not creating a new product. They relied on the Bombay High Court judgment in Commissioner of Sale Tax v. M/s. Trinity Product, which held that such activities do not amount to manufacture. The Tribunal agreed, stating that the process of sterilization and packing did not bring into existence a new product, thus not qualifying as manufacture.

Issue 2: Classification of the product:
The product "Milk Care Designer Feeder" was classified under sub-heading 3924.90 of the Central Excise Tariff Act, 1985. The Assistant Collector and the Collector (Appeals) had confirmed this classification. However, since the Tribunal concluded that the activity did not amount to manufacture, the question of classification became irrelevant.

Issue 3: Entitlement to the benefit of Notification No. 14/92-C.E.:
The benefit of Notification No. 14/92-C.E., dated 1-3-1992, was granted by the Assistant Collector subject to the condition that inputs used in the product should be duty paid. The appellants argued that the inputs purchased from the market were deemed duty paid. The Tribunal did not need to address this issue directly as it concluded that no manufacturing process was involved, thus the question of entitlement to the notification did not arise.

Separate Judgment by S.K. Bhatnagar, Vice President:
S.K. Bhatnagar, Vice President, agreed with the conclusion but provided additional observations. He emphasized that each case must be examined on its own merits to determine whether an activity amounts to manufacture. He noted that the definition of "manufacture" in central excise is broader and incorporates many deeming provisions. He concurred with the application of the Bombay High Court judgment in Trinity Products, stating that the activity undertaken by the appellants did not amount to manufacture and thus, the impugned order should be set aside.

Conclusion:
The Tribunal allowed the appeals, concluding that the activity of packing and sterilization did not amount to manufacture, making the issues of classification and entitlement to the notification irrelevant.