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TMI Blog2024 (10) TMI 1539X X X X Extracts X X X X X X X X Extracts X X X X ..... d, preheated and coated with zirconium nitride through Vacuum Chamber with the help of specific amount of gases and as a result of these process the colour of parts get changed to yellow alike the process of gold plating, Brand name i.e. KOHLER is then embossed/laser marked on these items dos not amount to manufacture as PVD coating constitutes merely makes products rust-free and this process does not change any function of the product except colour does not bring into existence a new product. While applying the ratio laid down by the Hon ble Apex Court in UNION OF INDIA VERSUS JG. GLASS INDUSTRIES LTD. [ 1997 (12) TMI 110 - SUPREME COURT ], it is found that the process of PVD is not merely a colour changing or making the product rust-free. Without undertaking the process, the articles in dispute cannot be used as they will be highly corrosive and rust prone being always in contact with the water and will have practically no shelf life. The process of PVD is not applied merely to enhance the visual appeal but is necessary to make the product worth of its use. The process clearly falls within the definition of manufacture under Section 2(f) of the Central excise Act being incidental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed goods ('FG') are bought from outside. The FGs as bought are completely functional and marketable. No component of the FG is manufactured at the factory. The FG as bought is unpacked at the factory. The individual components undergo the PVD process wherein parts are cleaned, pre-heated and and coated with zirconium nitride through Vacuum Chamber with the help of specific amount of gases. This process does not change any function of the product except colour. Thereafter, the 'KOHLER' mark is engraved on the FG through laser printing. The components are reassembled and re-packed. Thereafter, the FG are removed from the factory. (iv) Joining connectors - The finished goods ('FG') consists of health faucet and hand shower. The FG consists of hose pipe and spray jet. The individual components are purchased from outside. No component is manufactured at the faucet plant: (a) The components for the respective FG are individually packed in a single unit container and removed from the factory; or (b) The hose pipe is connected to the spray jet with an adapter in between. Thereafter, the FG is packed and removed from the factory. (v) Trim packing - The finished goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Plate, Cover Kit Handle in specific cover, these three components packed together in a single packet along with Installation manual, affixing of sticker having specification such as date of manufacturing, M,R.P., Quantity, batch/code is being undertaken. On this basis it was alleged that after doing all these processes/activities in the factory premises, a new/distinct product emerge which is known as Eolia Shower Trim which is functional, marketable and usable by their end users, (II) As regards HEALTH FAUCET W/WHITE SDSPRAY, M HOSE it was observed that the appellant -is purchasing various items viz. Spray head, Adopter, Hose Pipe, brackets etc., from different foreign/indigenous suppliers in bulk quantities. After unpacking these items at factory, Adopter is fitted with Spray head , then hose pipe is connected with Spray head, the goods are branded as, KOHLER through, Laser process. The goods so obtained are subjected to quality control test to check the quality/ function test etc. as per prescribed norms set by assessee for their goods and if the same found OK in all respect, then goods taken for packing activity and these items are put in specific cover before being packed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubjected to quality/function test etc. for checking the prescribed norms as set by assessee and if the same found OK in all respect, the goods are taken for packing activity, then each part/component are assembled and they are kept in specific cover. Thereafter, finished goods are packed with installation manual in a packet. On packet sticker having specification of goods, kept inside is affixed. On this basis it was alleged that the processes which are undertaken by assessee add substantiality to the visual appeal, feel, value and marketability of the items. (V) Similar activities, as discussed above for the product BOTTLE TRAP are also being carried out by the assessee for the finished goods viz. FLOOR DRAIN , PURIST SHOWERHEAD , W/ ARM FLANGE and similar items, before being packed by the assessee for ultimate sale of these goods. On this basis it was alleged that the processes which are undertaken by assessee add substantiality to the visual appeal, feel, value and marketability of the items. (VI) For the finished goods viz. LOURE DOUBLE ROBE HOOK Hand shower Bracket and similar Items, It was observed that after the items being procured from foreign suppliers in bulk quantities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to manufacture. The Hon'ble Supreme Court in Delhi Cloth and General Mills Co. Ltd. held that processing cannot be equated with manufacture. A similar observation was made in South Bihar Sugar Mills v. Union of India 1978 (2) ELT 336 (S.C.). J.G. Glass Industries Ltd., the Supreme Court laid down two tests to determine if a process amounts to manufacture : (i) Whether a different commercial commodity comes into existence, or the original ceases to exist. (ii) Whether the commodity serves no purpose but for the process. These tests were applied in Reliance Industries Ltd. v. CCE, Rajkot 2020 (372) ELT 414 (Tri. Ahd.). Applying these tests to the present case, none of the 136 items in question undergo any transformation that renders them new products. The bought-out items were already marketable and were not rendered marketable solely by any process carried out by the Appellant. The Ld. Commissioner failed to consider the above judgments and confirmed the demand for excise duty on the basis that the processes amount to manufacture. The impugned order should be set aside on this ground. Mere branding by laser marking, packing, and labeling of the final products does not amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I v. S.R. Tissues Pvt. Ltd. - 2005 (186) ELT 385 (S.C.). The amounts deposited under protest as excise duty are liable to be refunded to the Appellant along with interest. 5. On the other hand Ld. Departmental representative Shri Rajesh K Agarwal, Superintendent (AR) appearing on behalf of the Revenue reiterated the findings of the impugned Order. 6. We have carefully examined the rival arguments. We find that in respect of items at Sr. no. (I), (II) (III) above, the appellant are purchasing parts/components of EOLIA SHOWER ONLY TRIM , HEALTH FAUCET W/WHITE SDSPRAY, M HOSE and INLINE STOP VALVE TRIM from different domestic/ foreign suppliers, and brand name Kohler is laser printed on the parts/component, thereafter performing quality testing, the finished products in un-assembled/ dis-assembled form is packed with batch code, MRP and other related information. The appellant has claimed that the process of simple kitting or sub-assembly cannot be considered manufacture . We are of the considered opinion that the customers get a complete finished product in un-assembled/ dis-assembled form under the brand name KOHLER which has a different identity, end use, nomenclature different fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the process of printing, the bottles will serve no purposes or are of no commercial use. While applying the ratio of the above test laid down by the Hon ble Apex Court, we find that the process of PVD is not merely a colour changing or making the product rust-free. Without undertaking the process, the articles in dispute cannot be used as they will be highly corrosive and rust prone being always in contact with the water and will have practically no shelf life. The process of PVD is not applied merely to enhance the visual appeal but is necessary to make the product worth of its use. The process clearly falls within the definition of manufacture under Section 2(f) of the Central excise Act being incidental and ancillary to the manufacture of the finished goods. As regards the products falling in the category at Sr. No. (VI) above i.e. , we are of the considered opinion that merely branding of the product with laser printing by engraving brand KOHLER mentioning MRP and other particulars on the packages does not bring any material change so as to bring within the definition of manufacture under Section 2(f) of the Central Excise Act. In view of the discussions above we pass the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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