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TMI Blog2015 (5) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2(f) manufacture includes any process incidental or completion of manufacture product that means even if a product is partly manufactured any activity incidental/ancillary to complete such product shall also be amounting to manufacture. In the present case input are more than 100 parts and even these parts in the form of components and not a manufactured good therefore assembly of all these parts converting to distinguished product which is called as lottery terminal. Therefore the activity from conversion of various components of lottery terminal into complete unit of lottery terminal is undoubtedly amounting to manufacture and correctly chargeable to excise duty under chapter heading 84709010 - Decided against assessee. - Application Nos. E/Stay/95089/14, E/Stay/65088/14, E/Stay/95126/14, Appeal Nos. E/86833/14-Mum, E/86832/14-Mum, E/86840/14-Mum - Final Order Nos. A/926-928/2015-WZB/EB - Dated:- 23-4-2015 - P K Jain, Member (T) And Ramesh Nair, Member (J),JJ. For the Appellant : Shri Sanjay Diwedi, Adv. For the Respondent : Shri V K Agarwal, Addl. Commissioner (AR) ORDER Per: Ramesh Nair: The appeal and stay applications are directed against the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is tribunal mainly observed the discrepancy in classification of goods namely lottery terminals. Adjudicating authority in the adjudication classified the same under heading 85421090 as against this tribunals prima facie view that it should be classified in 84709010. In the denovo adjudication Ld. Commissioner in his order dated 18/2/14 confirmed demand of Central Excise duty of ₹ 1,59,47,997/- and imposed penalty of equal amount under Section 11AC of Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002, interest under Section 11AB was demanded, penalty of ₹ 25,000/- was imposed on Shri Sudesh Rao, Director of M/s. Leo Circuit Boards Pvt. Ltd. and penalty of ₹ 25,000/- on M/s. Pan India under Rule 26 of Central Excise Rules, 2002. Aggrieved by the impugned order all the three appellants are before us. 2. Shri Sanjay Diwedi, Ld. Counsel for the appellants made following submissions: (a) The appellant procured complete lottery terminals from M/s. International Lottery Totlizator System Inc., USA in CKD condition and they have not procured any single item from any other sources. The imported goods were not in complete or unfinished. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the customers premises. This activity does not involved manufacture of sofa, cupboard etc at the customers premises. As regard assembly of various components, reliance was placed on the judgments in the case of Indian Xerographic Systems Ltd. [1995 (80) E.L.T. 337 (Trb)] according to which assembly of various components does not amount to manufacture. The necessity of importing goods in dis-assembled condition is due to cost of packing convenience and ease of transportation. Various judgments were relied upon which are cited below: (a) Jai Bhawani Steel Enterprises Ltd. vs. CCE [2003 (157) ELT 427 (T)] (b) HEM Electric Manufacturing Co. Ltd. vs. CCE [ 2009 (243) ELT 193] (c) Standard Industries Ltd. vs. CC, Trichy [2000 (37) RLT 214 (T)]; (d) Dolphin Drugs Pvt. Ltd. vs. CC, Mumbai [2000 (115) RLT 552 (T)]; (e) Formica India Division vs. CCE, [1995 (77) ELT 511 (SC)] (f) Madhav Steel vs. UOI - WRIT PETITION NO. 2706 OF 2006 (g) Manglore Chemicals Fertilizers Ltd. [1991 (55) ELT 437 (SC)] (h) Kamdeep marketing Pvt. Ltd. vs. CCE [2004 (165) ELT 206 (T) (i) Wooden Industries vs. CCE [2004 (164) ELT 339 (T) affirmed by Supreme Court at 2004 (170) ELT A 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication they could not produce any evidence that the goods manufactured by them have been exported by producing documentary evidence such as export invoice, shipping bills etc. to co-relate with the goods manufactured and cleared by the appellant, therefore it is clear that goods manufactured by the appellant have not been exported and cleared for home consumption. As regard the time bar and imposition of penalties, he submits that the activity of manufacture of 1500 lottery terminals and clearance thereof was never declared by the appellant to the department despite the fact that at earlier occasions they cleared the same product on payment of excise duty therefore the appellant was knowing this fact that product is dutiable. They suppressed this fact from the department therefore extended period is correctly invokable and consequent penalties was rightly imposed. 4. We have carefully considered the submissions made by both the sides. Since the appeals and stay applications are listed today as direction of this tribunal vide order NO. M/1539/14/EB/C-II dated 23/6/2014, we are taking up both appeals as well as stay applications for disposal. 5. The appellant through out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disassembled. In view of the rule 2(a), if CKD parts in complete set are imported, for the purpose charging custom duty, it shall be classified as complete machines under the chapter heading of the said machine but it is for limited purpose of charging custom duty and not resorting the term manufacture provided in Section 2(f) Central Excise Act. Section 2 (f) is reproduced below (f) manufacture includes any process,- (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in, the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to any goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and notwithstanding the fact that the appellant might have paid Customs duty on the imported components, he is liable to pay excise duty on the activity undertaken by him. In the instant case, the product is motor cars of Honda brand and motor cars were specified in Item no. 34 of the Central Excise Tariff as it stood at the relevant time. Assembly of cars from various components brings into existence an excisable item namely, car, which is distinct and different from the parts from which it is assembled. Therefore, assembly of cars from components parts amounts to manufacture under section 2(f) of the Central Excise Act, 1944 and excise duty is liable to be charged, on such assembly. As held by the Hon'ble Apex Court in the case of Federation of Hotels and Restaurants Association vs. UOI 1989 3 SCC 634, different aspects of a transaction can be subjected to different taxes, if the law so provides. As has been succinctly stated in the said case subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legislative power. There might be overlapping; but the overlapping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly relied upon Note 6 to Section XVII which reads as under :- 6. In respect of goods covered by this Section, conversion of an article which is incomplete or unfinished but having the essential character of the complete or finished article (including 'blank', that is, an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part), into complete or finished article shall amount to 'manufacture'. 7.2 It is apparent from the wordings of this Note that if a product which is incomplete or unfinished is completed or finished, the process for making it complete or finished will amount to manufacture. According to Webster IXth New College Dictionary, conversion means something converted from one use to another. The Appellants are converting SKD kits into motor cycle so that the components could be used as a motor cycle. The decision relied upon by them are not applicable to the facts of the present case. The decision in the case of Indian Xerographic System was in respect of Item No. 33D of the erstwhil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellants shall at their own risk and expenses provide premises, facilities, equipments, machines and tools required for the production operations in India and both the production operations and standard of the assembly motor cycle shall comply in full with BMW requirements. We, therefore, uphold that the process of assembly undertaken by the Appellants amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act. In view of above judgments it is clear that assembly of various components into complete equipment or machinery indeed amounting to manufacture. In view of this position, the activity of assembling of various components of lottery terminals and making a complete unit of lottery terminals is amounting to manufacture and same is excisable product. As regard the claim of the appellant that lottery terminal assembled by them has been exported on the ground that in the advance licence of M/s Pan India under which the CKD parts of lottery terminals were imported appears the name of appellant, M/s. Leo as supporting manufacturer. We find that merely on this count claim of the appellant as regard export of goods does not get substantiated. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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