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TMI Blog2016 (8) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... Device and would also continue to serve its functions. We are also in agreement with the applicant that Chapter Note 10 or any other Note to Chapter 85 is not applicable in the present case to consider the activity of up-loading of business software in the Nucleus Device as deemed manufacture. If the intention of the legislature was to treat up-loading of software into devices like Nucleus Device, as manufacture, Note(s) to Chapter 85 would have included goods of heading 8517, deeming such activity to be manufacture. Therefore, the activity of loading of business software in the Nucleus Device by the applicant will not constitute manufacture under the Central Excise Law. - Decided in favour of applicant - Ruling No. AAR/44/CE/ 18 /2016 In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Upon import into India, the Nucleus Devices would be loaded with the business software developed by the applicant before they are sold in the domestic market. The Nucleus Device has connector pins that can be used for downloading software and charging the battery. The business software and data would be loaded into the device using the Software Download, Battery Charger Adapter. Under this procedure, the business software and data would be downloaded into the Flash memory of the Nucleus Device. The Personal Computer (PC) sends the commands to download the software to the Nucleus Device via the USB cable. Before the downloading process, the Nucleus Device needs to be connected to the PC via the Software Download, Battery Charger Adapter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout which device would not function as a cashless currency transmitting apparatus and loading of software involve process of manufacture; that Nucleus Device and software are different and distinct goods under the Central Excise Act having been classified differently; that loading of software converts the hardware manufactured into functioning Nucleus Device and this process amounts to manufacture. Revenue relying on the order of Tribunal in case of NCR Corporation India Pvt. Ltd. vs. Commissioner of Central Excise, Pondicherry 2010 (251) ELT 380 (Tri-Chennai) submits that loading of software on the Nucleus Device would amount to manufacture since the device could not function without it and cost of software would be part of the final cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1985 as amounting to manufacture; or iii. Which in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labeling 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. 8. Applicant submits that Nucleus Device is a complete manufactured product, when imported. Loading of software only enhances the utility of Nucleus Device, hence, loading of software cannot be said to be incidental or ancillary to completion of manufactured product as envisaged under Section 2 (f) (i) of the Central Excise Act, 1944. Further, under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as interpreted by the Courts. In this regards, applicant relied upon the decision of the Hon ble Supreme Court in the case, Union of India vs. Delhi Cloth and General Mills Co. Ltd. reported in 1977 (I) ELT (J199) wherein it was held that manufacture implies a change or transformation resulting in emergence of a new and different article having a distinctive name, character or use. Further, the Hon ble Supreme Court in the case, Union of India vs. J.G. Glass Industries reported at 1998 (97) ELT 5 (SC ) has evolved a two-fold test to determine manufacture. The first is whether by the said process, a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist. The second is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount to manufacture under the natural meaning. Similarly, the loading of business software being an activity comparable to recording of sound does not amount to manufacture within the natural meaning of the term. Applicant also submits that Note 10 of Chapter 85 states that for the purposes of heading 8523 recording of sound or other phenomena shall amount to manufacture. It is admitted fact that subject item is classifiable under heading 8517; that said Chapter Note is only applicable to goods covered under heading 8523; that Nucleus Device does not fall under 8523; that Chapter Notes to Chapter 85 do not provide embedding of software into a device classifiable under CTH 8517, to be read as manufacture. We are in agreement with the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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