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TMI Blog1995 (3) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... s imported components of ultrasound scanners in April, 1989. The export of goods stated to be ultrasound scanners took place in April, 1989. The import of the components was allowed free of duty in terms of Notification No. 116/88-Cus. Subsequently, on the basis of investigations carried out by the Director of Revenue Intelligence, Collector of Customs, issued show cause notices dated 6th November 1990 to both these companies. The show cause notices alleged that M/s Titan Medical Systems did not have any factory at NOIDA in April, 1989 and no manufacturing activity took place. The position was therefore, misrepresented to the Ministry of Industry. M/s. Nicolian Brothers also misrepresented the facts to the licensing authority. It had said that indigenous parts valued at Rs. 2.13 crores would be used in the manufacture of scanners whereas the value of the local parts was only Rs. 8.79 lakhs. The manufacturing charges payable to the subordinate manufacturer which was claimed to be Rs. 20 lakhs was only Rs. 5 lacs. The expenses of miscellaneous charges declared to be Rs. 2.08 crores to the licensing authority, only came to Rs. 20 lakhs. It was alleged that Para 221(1) of the Import Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of this was declared to be Rs. 212.69 crores and another Rs. 20 lakhs towards labour and other head cost for manufacturing testing and miscellaneous charges towards financial institutions, labour packing forwarding etc. but the total value to be locally incurred to Rs. 440.58 crores. In the course of investigation it was revealed that this figure was highly inflated. In a statement before the DRI Shri B.M. Kapad, Director of Titan, the subordinate manufacturer has said that he and Shri B.B. Patel of Nicolian had gone to Australia to inspect the machines. After return, he had told Shri Patel that the rough value of the local components would be Rs. 1.5 lakhs. He said further that no manufacturing activity was going on at the NOIDA factory because it was still under construction. Titan had written to Ministry of Industry on 25th January, 1989 for permission to carry on the manufacturing activity at the premises of M/s. Indo Dynamics Private Ltd. at F-1/7, Okhla Industrial Area, New Delhi. From Shri Kabadi s statement, it is clear that no manufacture took place at the premises of Titan. He does not say what manufacture if any took place at the premises of Indo Dynamics. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, would be assembly of components into the finished machines. The components arrived and were cleared from Delhi Customs on 27th March, 1989. The exported goods were cleared under AR-4A on 25th April, 1989. The interim period was thus 28 days. The total weight of imported material was about 5-1/2 tons. Allowing for transport and packing this leaves 26 days including holidays to complete assembly, test the machines, calibrate them and remove any defects. In view of the nature of the machines and the fact that they were used for medical diagnostics a high degree of precision would be involved in each of these operations. It would therefore, be expected that there would have been a work force of reasonable size, comprising technicians and engineers with requisite qualification who could have completed the job in this shown period. Titan s answer is to say that services of four engineers working in Ramtronics and Indo Dynamics, both sister concerns were utilised for assembling these machines with the help of some labour. Affidavits of four engineers have been filed. We are unable to agree that these affidavits establish that manufacture in any meaningful sense took place. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs with four workmen could not have completed the job within four weeks or so. What, then was the commercial motive for the manufacture to take place in India? The conclusion is inescapable that whatever manufacture if any took place in India, it must have been of a most rudimentary or basic type of fitment at the most. Such activity cannot be considered to be manufacture. The Supreme Court held in Rattan Exports v. CCE [1987 (31) E.L.T. 66 (S.C.)] that fitment of locks to cases does not amount of manufacture. It is needless for us to refer to the various other judgment of the Supreme Court on manufacture except to say that for it to take place a new and distinct commodity having a different name, character and use must emerge. It has not been shown by the appellant that this has occurred in the present case. It has therefore to be concluded that manufacture within the meaning of customs notification has not taken place. 11. In the light of this conclusion, we do not consider it necessary to deal with the point made by Shri Asthana that customs authorities could not come into the scope of the expression substantial manufacture occurring in the Import Policy. The Collector has a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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