Download - CENTRAL EXCISE LAW- Adv Thirumalai.pptx
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
1/84
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
2/84
Historical and constitutional background
Taxable Event / Charging section section 3
Concept of
Manufacture
Deemed Manufacture
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
3/84
Meaning Tax Vs. Duty any difference
Types of Taxes
Nature of CE Why tax is collected
Tax Vs. Fee
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
4/84
Essential characteristics of a tax
Not a voluntary payment or donation
Enforced contribution exacted pursuant tolegislative authority, in exercise of taxing power.
Imposed, levied and collected for the purpose ofraising revenue
Used for public or governmental purposes and notfor payment for some special privilege granted orservice rendered
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
5/84
Lord Lytton introduced income-tax and lowered excise duty.
His successor Lord Curzon lowered excise duty on salt during
1900.
Salt tax was increased in the later half of 19th century.
Lord Elgin imposed countervailing duty of 5% (excise on yarn
produced in Indian mills which would compete with
Lancashire yarn, imposed)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
6/84
Excise derived from ??
Latin words variants
Excido / excisum / accisus / accidere
Meaning to cut off, raze, demolish, eliminate
i.e. deduct or cut off something for the benefit of the
State
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
7/84
Excise duty on all Indian woven goods
Cotton Duties Act, 1896 levy and collection at
every mill in British India, upon all cotton goods
produced in such mills.
Intoxicants and drugs subjected to excise for
checking consumption than for raising revenue.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
8/84
VII Schedule Union List Entry 84 - Duties of excise on
tobacco and other goods manufactured or produced in India
except: alcoholic liquors for human consumption;
opium, Indian hemp and other drugs and narcotics,
but including medicinal and toilet preparations containing
alcohol or any substance including in sub-paragraph (b) of
this entry (eg. Medical syrups for cold/cough)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
9/84
State List
Entry 51 Excise duty on alcoholic liqours, opium
and narcotics
Union list Entry 97 any other matter not included
in List II, III and any tax not mentioned in list II or III
(residual powers)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
10/84
Courts views:
The Province of Madras Vs Boddu Paidanna & Sons, 1978 (2)
ELT J.272 (FC):
Duties of excise were on manufacture or production of
an article and although the expression duty of excise
was wide enough to include sales tax, in view of the
power expressly given to another authority to levy a
sales tax, the said expression must be given a more
restricted meaning than it might otherwise bear.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
11/84
In appeal before the Privy Council in Governor
General in Council Vs Province of Madras, 1978 (2)
ELT J.280 (PC) Excise was primarily a duty levied
upon a manufacturer producer on the commodity
manufactured or produced.
Tax on goods and not on sales or sale proceeds.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
12/84
There was no overlapping of excise duty and sales tax.
R.C.Jall Parsi and Ors Vs UOI, AIR 1962 SC 1281 Excise duty is
primarily a duty on production or manufacture of goods within
the country.
It is an indirect duty passed on to ultimate customer.
Ultimate incidence will always be on the customer. Can be
levied at any convenient stage.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
13/84
CCE Vs Acer India Ltd, 2004 (172) ELT 289 (SC) Duty of excise
is a tax upon goods and not sale or proceeds thereof. Taxable
event is manufacture or production.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
14/84
UOI Vs Bombay Tyres International, 1983 (14) ELT
1896 (SC):
Ultimate incidence of an excise duty, a typical
indirect tax, must always be on the consumer, who
pays as he consumes or expends and it continues to
be an excise duty on homemade goods, no matter at
what stage it is collected.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
15/84
Eri Beach Company Ltd Vs Attorney General of
Ontario, AIR 1930 PC 10 direct tax is one which is
demanded from the very person who it is intended
or desired should pay it. Indirect taxes are those
which are demanded from one person in the
expectation and intention that he shall indemnify
himself at the expense of another.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
16/84
The Central Board of Revenue Act, 1963 defines direct tax to
mean any duty leviable or tax chargeable under Estate Duty Act,
1953, Wealth-tax Act, 1957, Expenditure Tax Act, 1957, Gift Tax Act,1958, Income-tax Act, 1961, Super Profits Tax Act, 1963, Interest
Tax Act, 1974, Hotel Receipts Tax Act, 1980, and any other duty or
tax which, having regard to its nature or incidence, may be
declared by the Central Government, by notification in the official
gazette to be a direct tax.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
17/84
Art.366(28) of Const. of India Taxation includes the
imposition of any tax or impost, whether general or
local or special, and tax shall be construed
accordingly.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
18/84
Department friendly assessee (DFA)
Law conscious assessee (LCA)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
19/84
DFA is engaged in painting of Motor Cars. The Motor Cars
are imported by their customers and sent to DFA for
painting. DFA clears it from their premises by collecting
painting charges from their customers.
CE Department says:
You are a manufacturer
It attracts duty of 30% on market value of motor cars Pay duty on a daily basis by cash.
File copies of invoices before clearance and take our permission.
At the end of the month you show the records.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
20/84
DFA refers the matter to their finance department,
who work out the costs and say it is unviable.
DFA is confused and they come to you for advise???
How do you make them lawconscious?
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
21/84
What is the taxable event??
Is there manufacture/production of goods.
Does it result in excisable goods?
Rate???
Classification??
Valuation??
When payable??
Records/returns/authentication
Prior permission ??
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
22/84
Central Excise Act, 1944
Rules
CE Rules, 2002,
Cenvat Credit Rules, 2004,
CE (Appeal) Rules, 2001,
CE (Advance Rulings) Rules, 2002,
CE (Settlement of cases) Rules, 2007,
CE (Removal of Goods at Concessional Rate of duty for
manufacture of excisable goods) Rules, 2001,
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
23/84
CE Valuation (Determination of Price of Excisable Goods)
Rules, 2000,
CE (Compounding of Offences) Rules, 2005,
CE (Determination of Retails Sale Price of Excisable Goods)
Rules 2008
Central Excise Tariff Act, 1985
Notifications
Case laws
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
24/84
Section 3 of CE Act, 1944
Levy and collection
CENVAT other name
Manufacture/production in India
Goods/Excisable goods
Basic/Special Excise duty
SEZs excluded
EOUs special treatment
Tariff values
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
25/84
Levy collection meaning
Somaiya Organics Ltd Vs State of UP, 2001 (130) ELT
3 (SC) the word collection in Art.265 would mean
physical realization of tax, which is levied or
imposed. Levy and collect are not synonymous
terms. Levy means assessment or charging or
imposition of tax, collect means physical realization.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
26/84
JK Spinning & Weaving Mills Vs UOI, 1987 (32) ELT 234 (SC)
there was nothing in theory to prevent the central legislature
from imposing duty of excise on a commodity as soon as it
came into existence, no matter what happened to it
afterwards, whether it was sold, consumed or destroyed and
it was for the convenience of the taxing authority that duty
was collected at the time of removal.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
27/84
Art.366(12) Goods include all materials, commodities
and articles.
Sale of Goods Act, 1930 section 2(7) Goods every
kind of moveable property other than actionable claims
and money; and includes stocks and shares, growing
crops, grass and things attached to and forming part of
the land which are agreed to be severed before sale or
under the contract of sale.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
28/84
UOI Vs Delhi Cloth Mills, 1997 (1) ELT J.199 (SC), - in
order to be goods, the articles must be capable of
coming to the market to be bought and sold.
Therefore the items must be moveable and
marketable.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
29/84
Moveability:
DCM case
South Bihar Sugar Mills Vs UOI, 1978 ELT J.336 (SC)
The articles must be something, which can ordinarily
come or can be bought to the market to be bought and
sold. As opposed to moveable goods, immoveable
property cannot be brought to the market to be sold.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
30/84
Section 3(36) GC Act, 1897 moveable goods mean
property of every description except immovable
property
Section 3(26) GC Act, 1897 immoveable property
shall include land, benefits to arise out of land, andthings attached to the earth or permanently
fastened to anything attached to the earth.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
31/84
Marketability:
Capability of a product of being put into the market for sale.
Union Carbide India ltd Vs UOI, 1986 (24) ELT 169 (SC) An
article must be something which can ordinarily come to the
market to be bought and sold. Articles in crude or elementary
form are not dutiable as they are merely intermediary
products and not goods. Aluminum cans or torch bodies
produced by extrusion process neither sold nor marketable
not goods.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
32/84
CCE Vs Ambalal Sarabhai Enterprises, 1989 (43) ELT 214 (SC)
Duty of excise is on the manufacture of goods and for an
article to be goods, it must be known in the market as such
or must be capable of being sold in the market as goods.
Actual sale is not necessary. Usage in captive consumption is
not determinative of whether the article is capable of being
sold in the market or is known in the market as goods.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
33/84
Even transient items/articles can be goods, provided
they are known in the market as distinct and
separate articles, having separate uses. Thus, goods
with unstable character can be theoretically
marketable if there was a market for such transienttypes of articles, but one has to be take a practical
view on the basis of available evidence.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
34/84
Bhor Industries Ltd Vs CCE, 1989 (40) ELT 280 (SC)
Merely because an article is specified under the
Tariff, it would not be correct to state that it is
chargeable to duty, unless it is proved that the
goods are marketable. See also Ion Exchange IndiaLtd Vs CCE, 1999 (112) ELT 746 (SC)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
35/84
Number of purchasers not relevant.
Does not confine to territorial limits of India.
The fact that goods are not actually marketed is of no
relevance nor is it necessary that the goods in question
should be generally available in the market.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
36/84
Section 2 (d) of CE Act it means goods specified in the
First and Second Schedules to the CE Tariff Act, 1985 as
being subject to a duty of excise and includes salt.
Explanation Goods include any article, material or
substance which is capable of being bought and sold for
a consideration and such goods shall be deemed to be
marketable. (2008 amendment)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
37/84
CET 1st and 2nd schedule
Section wise each section has chapters each
chapter heading/sub-heading.
Nil rate/ exemption (whether excisable) Wallace
Flour Mills Ltd Vs CCE, 1989 (44) ELT 598 (SC) & UOI
Vs Nandi Printers P.Ltd, 2001 (127) ELT 645 (SC).
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
38/84
Manufactureincludes anyprocess, -
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
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
39/84
iii) which, in relation to the 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 of excisable goods, but also any person who engages in their
production or manufacture on his own account;
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
40/84
Definition starts with the word includes
3 limbs in the definition
2nd and 3rd limb Deemed manufacture
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
41/84
a) Activity of transferring the goods from tankers into
smaller drums not amounts to manufacture
As per note 10 to Chapter 29, the activity of repacking products mentioned in
the said Chapter from bulk packs to retail packs shall amount to manufacture
under section 2(f)(iii) of the Central Excise Act, 1944.
In this regard, it has been clarified that the activity of transferring the goods
from tankers into smaller drums cannot be said to be covered by the said
chapter note 10 because the tankers cannot be termed as bulk packs.
[Circular No. 910/30/2209-CX dated 16-12-2009]
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
42/84
b) Pickling and oiling is not manufacture
It has been clarified that the process of pickling and oiling does not amount to manufacture.
Pickling is removing surface oxides from metals by chemical or electro chemical reaction and
pickle means the chemical removal of surface oxides (scale) and other contaminants such as
dirt from metal by immersion in an aqueous acid solution. Therefore it can be said that the
process of pickling is only a chemical cleaning process to remove scales and dirt from the
metal by immersion in chemical solution and does not result in emergence of any new
commercially different commodity.
The Tribunal has also in the case of Resistance Alloys [1996(84)ELT507(T)] & Bothra Metal
Industries [1998(99)ELT120(Tribunal)] held that the process of pickling being preparatory
process to drawing of wire does not amount to manufacture.
Therefore it has been clarified that mere undertaking the process of oiling and pickling as
preparatory steps do not amount to manufacture. [CircularNo.927/17/2010-CX dt.24.06.2010]
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
43/84
A. The distinction between the manufacture and process has been dealt by the Supreme
court in the case of Union of India Vs. J.G. Glass Industries Ltd. 1998 (097) ELT 0005
(S.C) where in the apex court observed that the answer to the question whether the
process is that ofmanufacture would be based on two-fold test-First, whether by the
said process a different commercial commodity comes into existence or whether the
identity of the original commodity ceases to exist- Secondly, whether the commodity
which was already in existence will serve no purpose or will be of no commercial use but
for the said process. In the above case with reference to the process of Printing,
whether a process amounting to manufacture Test is whether the product would
serve any purpose but for the printing If the product could serve a purpose even
without printing and there is no change in the commercial product after the printing is
carried out, the process cannot be said to be one ofmanufacture.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
44/84
B. The meaning of incidental or ancillary : However inessential the process may be, if it
is found incidental or ancillary to the completion of the manufactured product, then
that process falls within the compass of the expression manufacture.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
45/84
Final Products Product / Process/Activity Citation
Aluminium Cutting, drilling and punchingof aluminium section
CCE Vs. Ajit India Pvt. Ltd.2000 (119) ELT 274 (S.C.)
Aluminium cans (torch
bodies)
Aluminium slugs converted to
intermediate product
Union Carbide India Ltd. Vs.
CCE 1986 (24) ELT 169 (S.C);Geep Industrial Syndicate Ltd.Vs. CG 1987 (31) ELT 865 (S.C)
Butter Stirring of cream State of Tamil Nadu Vs. BharatDiary Farm 1992 (61) ELT 25(Mad.)
BOPP Films Winding, slitting and packing CC&CE Vs. Crown Tapes Pvt.Ltd. 2009 (233) ELT 357 (Tri.Ahmd)
Cable Joining Kits Putting together different dutypaid items not manufacture
XI Telecom Ltd. Vs. CCE 1999(105) ELT 263 (A.P.)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
46/84
Final Products Product / Process/Activity Citation
Chilled Water Chilling of Water Farm & Co. Vs. CCE 1987 (30)ELT 541 (T)
Chilly Powder Pulverising of chilly Namputhiris Pickle Industries
Vs. State of Kerala 194(92)STC1 (S.C.)
Cinder Burning in boiler of coal CCE Vs. Papyrus Papers, 1983(33) ELT 97 (T), Union of IndiaVs. Ahmedabad Electricity Co.2003 (158) ELT 3 (SC)
Coffee Reprocessing of coffee CCE VS. Brooke Bond IndiaLtd. 198 (101) ELT 2965 (T-SZB)
Coloured / Printedpaper
Colouring / printing of whitepaper
Swastic Products Vs. SCE1980 ELT 164 (Guj.)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
47/84
Final Products Product / Process/Activity Citation
Coloured plasticgranules
Conversion of plastic granules Vadodara CTN No. 61/92,dated 22-07-1992, 1192 (60)ELT T43
Computer underHeading No. 84.71 Upgradation does not amountto manufacture Installation atcustomers site notmanufacture
CBEC Circular No. 454/20/99-CX, dated 12-04-1999,Universal Micro Systems Vs.CCE 1999(107)ELT 505(T)
Curry powder, rasampowder, masala powder
Mixing of chilly powdercoriander powder
State of Tamil Nadu Vs. SVSNatarajan & Sons 1992 (84)
STC (Mad.)Cycle Assembling of cycle parts T.I. Cycles of India Vs. U.O.I.
1983 ELT 681 (Mad.)
Feeding bottle Putting together bought outparts like bottles, nipples, lidsect. Is not manufacture
Dalmia Industries Ltd. Vs. CCE1999 (112) ELT 305 (T)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
48/84
Final Products Product / Process/Activity Citation
Filler wire Straightening and cutting intorequired sizes of wires (stainlesssteel)
D&H Sechron Electrodes Pvt. Ltd.Vs. CCE 1990 (40) ELT 401 (T)
Furniture (for
resale)
Polishing / colouring of old
furniture
CST Vs. Musarafalli Kutbuddin 35
STC 503 (Bom.) CST Vs. HabibKasambai 35 STC 560 (Bom.)
Garland / bouquets Preparation of flowers Sudhir Ch. Mukherjee Vs. Addl.Commissioner of CT 1976 (37) STC554 (Cal.)
Ingots / billets Recycling of aluminium waste Salco Extrusions P. Ltd. Vs. CCE1984 (16) ELT 356 (T)
Jelly (stone) (Seecontract decisionunder Table below)
Breaking of boulders Reliable Rock Builders Vs. State ofKarnataka, 49 STC 110 (Kant);Kher Stone Crushers Vs. G.M.District Industries Centre, 1992
(62) ELT 586 (M.P.)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
49/84
Final Products Product /Process/Activity
Citation
MS Scrap, borings,
turnings, etc.,
Generated during
maintenance and repair
work
Prism Cement Ltd. Vs. CCE 2008 (232) ELT 564 (T)
Pan-masala Mixing of supari,variyali, dhana dal etc., State of Gujarat Vs. Sukhram Jagannath 50 STC 76(Guj.)
Paper Polishing / printing of
paper
Modern Paper Industries Vs. Union of India 1983
ECR 636 D (Bom.)
Pillows Covering an uncovered
pillow
DP Foam Pvt. Ltd. Vs. CCE 1999 (106) ELT 544 (T)
Pine apple Slicing of pineapple Dy. CST Vs. PIO Food Packers, 1980 (6) ELT 343(S.C.)
Planks / rafters Sawing of timber logs Y. Mohiden Kunhi and Others Vs. CCE 1986 (23) ELT
293 (Kar.) See also Sanghvi Enterprises Vs. CCE
1984 (16) ELT 317 (T), CCE Vs. Kutty Flush Doors &
Furniture P. d. 1988 (35) ELT 6 (S.C.). Departmental
appeal dismissed 1997 (89) ELT A105.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
50/84
Final Products Product / Process/Activity Citation
Powdered pepper/ Turmeric
Powdering of pepper / turmeric Mahabirprasad Bishiwala Vs. Stateof W.B. 31 STC 628 (Cal.) KrishnaChander Dutta (Spice) Pvt. Ltd. Vs.CTO (1994) 93 STC 180 (S.C.) 1994
(70) ELT 501 (S.C)
Reels of lesserwidth and diameter
Slitting and rewinding of paper(jumbo reels)
CCE Vs. Reelco Paper Products (P)Ltd., 1989 (40) ELT 435 (T)
Turmeric Powder Pulverising of turmeric Krishna Chander Dutta (Spice) P.
Ltd. Vs. CTO 1994 (70) ELT 501 (S.C.)
Water Process of removing chemicalsto make it soft withoutpurifying
McDowel Co. Ltd. Vs. CCE 1999(105) ELT 577 (T)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
51/84
Final Products Product / Process/Activity Citation
Audio Cassettes Recording of audio cassettesamounts to manufacture as pre-recorded cassette is distinct
Gramophone Co. Ltd. Vs. CC 1999 (114)ELT 770 (SC)
Bagasse Crushing of sugarcane Deccan Sugar and Abkhari Company Vs.
Union of India, 1986 (26) ELT 209 (Mad.)
Bed Sheets, bedspreads andtable cloths
Cutting, hemming and stitchingof running cloth
Kapri International Vs. CCE 1986 (23) ELT538 (T)
Biris Rolling of Tobacco Y. Tirupathy Rao Vs. CCE 1983 ELT 2346
(AP)Brass Mixing of copper & Zinc Khandelwal Metal & Engg. V. Union of
India 1983 ELT 292 (Del.) (affirmed in1985(20)ELT 222 (S.C.)
Brass tubes new Marking and remarking of tubesof brass out of old brass tubes
Multi. Metal Ltd. Vs. CCE 1995 (75) ELT 938(T) affirmed by the Supreme Court in 1995
(78) ELT A31
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
52/84
Final Products Product / Process/Activity Citation
Bright bars Drawing of round bars Veekayan Industries Vs. CCE 1985 (21) ELT596 (T)
Camphor Cubes Conversion of camphorgranules
Om Prakash Gupta Vs. CTO 38 STC 73(Cal.)
Canned Foods Canning of vegetable products Ramnagar Cane & Sugar Co. Vs. Union ofIndia, 1983 ELT 6 (Raj.)
Chappals Assembly of rubber sole &rubber strap mouldings
Achamma Sebastian Vs. State of Kerala,1967 (20) STC 483 (Ker.)
Cinema Wall
paper
Printing of paper CCE Vs. Sudhakar Litho Printers, 1988 (36)
ELT 346 (T)
Circles Rolling & billets of copper Union of India Vs. Ramlal, 1978 ELT (J389)(SC)
Coconut fiber Conversion of coconut husk DCST Vs. Coco fibers, 1991 (53) ELT 515(SC)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
53/84
Final Products Product / Process/Activity Citation
Computers Assembly of computer from dutypaid parts amounts tomanufacture
Sheth Computers Pvt. Ltd. Vs. CCE 2000(121) ELT 738 (T)
Dyed & printedcloth
Dyeing & printing of grey cloth Lal Woolen and Silk Mills P. Ltd. Vs. CCE1999(108) ELT 7 (S.C)
EvacuatedBottles
Empty bottles cleaned,siliconized, evacuated sealed andsterlised to make a new product
Shri Krishna Keshav Laboratories Ltd.Vs. CCE 1999 (105) ELT 117 (T)
Fruit Drink Conversion of fruit pulp to readymade drink
Godrej Foods Ltd. Vs. CCE 2000 (122)ELT 231 (T)
Ghee Boiling of butter Motilal Ramchandra Oswal Vs. State ofBombay 3 STC 140 (Bom.)
Glass Moulds Grinding polishing of glass blanks-
opthalmic
Forbes Gokak Ltd., Vs. Collector of C.Ex.,
2003 (153) ELT 24 (SC)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
54/84
FinalProducts Product / Process/Activity Citation
Gittis, ballast Crushing of stone boulders Kher Stone Crusher Vs. G.M. Dist.Industries Centre 1992 (61) ELT 587 (MP-FB); Contra Reliable Rock Builders Vs. Stateof Karnataka, 1982 (49) STC 110 (Kar.)
Groundblack pepper
Grinding of black pepper CCE Vs. Herbal Isolates (P) Ltd. 1994 (74)ELT 929(T)
Hair Oil Addition of perfume to hair oil CCE Vs. Zandu Pharmaceuticals Works Ltd,2006 (204) ELT 18 (SC)
Ingots Melting of scrap Iron Rangoon Meal & Refining Com Vs. State of
Tamil Nadu 47 STC 60 (Mad.)Jewellery Conversion of Crude diamonds Bapalal & Co. Vs. Government of India,
1981 ELT 587 (Mad.)
MasalaPowser
Prepared by grinding and mixingof various spices and condimentsin certain proportion After
grinding and mixing, integredients
AP Products Vs. State of Andhra Pradesh,2007 (214) ELT 485 (SC)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
55/84
FinalProducts
Product / Process/Activity Citation
New Jewellery Melting / Conversion Jewellery
(Old)
Chenna Kesavalu Vs. Board of Revenue,
1981(47) STC 403 (Mad.)
Photographic
films
Cutting slitting of jumbo rolls of
photographic films
CBEC Circular No. 13/92-CX3, dated 28-12-
1992, 1993 (63) ELT T31
Polythene Kraft Lamination of paper (kraft) Laminated Packing (P) Ltd. Vs. CCE 1990 (49)
ELT 326 (SC)
Recorded video
cassette
Recording and re-recording of
blank video cassette
Garware Plastics & Polyesters Ltd. Vs. CCE
1993 (67) ELT 670, 673 (T)
Rice Dehusking of paddy State of Karnataka Vs. B. Raghuram Sethy, 47
STC 282 (S.C)Rice Milling Paddy M. Narayanan Nambiar Vs. State of Karnataka
44 (STC) 191 (Ker.)
Water filter Putting together parts alongwith
bought out filter cum purifier
Eureka Forbes Ltd. Vs. CCE 2000 (122) ELT 550
(T)
It should be noted that the above decisions may not be the final word since we normally seeconflicting decisions being rendered by various courts on the same set of facts
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
56/84
It must also be understood that as discussed earlier the
Supreme Court in its decisions in Union Carbide India Ltd.
Vs. Union of India (1986) (24) ELT 169 and in Bhor
Industries Ltd. Vs. C.C.EX. (1989) (40) ELT 280 has held
that an intermediate product would be excisable only if it is a
complete product in the sense that it is capable of being sold
to a consumer.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
57/84
Considering the conflicting judgments, CBEC issued circular No.
58/1/2002-CX, dated 15-1-2002 to clarify its position on the
excisability of immovable property which is as under:
i. For goods manufactured at site to be dutiable they should have a new
identity, character and use, distinct from the inputs/components that
have gone into its production. Further, such resultant goods should be
specified in the Central Excise Tariff as excisable goods besides being
marketable i.e. they can be taken to the market and sold (even if they
are not actually sold). The goods should not be immovable.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
58/84
ii. Where processing of inputs results in a new product with a distinct
commercial name, identity and use (prior to such product being
assimilated in a structure which would render them as a part of
immovable property), excise duty would be chargeable on such
goods immediately upon their change of identity and prior to their
assimilation in the structure or other immovable property.
iii. Where change of identity take place in the course of construction or
erection of a structure which is an immovable property, then there
would be no manufacture ofgoods involved and no levy of excise
duty.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
59/84
iv. Integrated plants/machines, as a whole, may or may not be goods.
For example, plants for transportation of material (such as handling
plants) are actually a system or a network of machines. The system
comes into being upon assembly of its component. In such asituation there is no manufacture of goods as it is only a case of
assembly of manufactured goods into a system. This cannot be
compared to a fabrication where a group of machines themselves
may be combined to constitute a new machine which has its own
identity/marketability and is dutiable (e.g. a paper making machine
assembled at site and fixed to the earth only for the purpose of
ensuring vibration free movement).
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
60/84
v. If items assembled or erected at site and attached by foundation to
earth cannot be dismantled without substantial damage to is
components and thus cannot be reassembled, then the items would
not be considered as moveable and will, therefore, not be excisable
goods.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
61/84
v. If any goods installed at site (example paper making machine) are capable of being sold orshifted as such after removal from the base and without dismantling into its component/parts,
the goods would be considered to be moveable and thus excisable. The mere fact that the
goods, though being capable of being sold or shifted without dismantling, are actually
dismantled into their components/parts for ease of transportation etc., they will not cease to
be dutiable merely because they are transported in dismantled condition. Rule 2(a) of the
Rules for the interpretation of Central Excise Tariff will be attracted as the guiding factor is
capability of being marketed in the original form and not whether it is actually dismantled or
not, into its components. Each case will therefore have to be decided keeping in view the
facts and circumstances, particularly whether it is practically possible (considering the size and
nature of the goods, the existence of appropriate transport by air, water, land for such size,
capability of goods to move on self propulsion ships-etc.) to remove and sell the goods as
they are without dismantling into their components. If the goods are incapable of being sold,
shifted and marketed without first being dismantled into component parts, the goods would
be considered as immovable and therefore not excisable to duty.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
62/84
vi. When the final product is considered as immovable and hence not excisable
goods, the same product in CKD or unassembled form will also not be dutiable
as a whole by applying Rule 2(a) of the Rules of interpretation of the Central
Excise Tariff. However, components, inputs and parts which are specified
excisable products will remain dutiable as such identifiable goods at the time
of their clearance from the factory or warehouse.
vii. The intention of the party is also a factor to be taken into consideration to
ascertain whether the embedment of a machinery in the earth was to be
temporary or permanent. This, in case of doubt, may help determine whether
the goods are moveable or immovable.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
63/84
Particulars CitationPlant and machinery embedded in earth, structures,erections and installations are not goods
Quality Steel Tubes Vs. CCE 1995(75) ELT 17 (SC)
Boiler erected at site with duty paid componentswhich were cleared in CKD/SKD condition was heldto be not excisable since the boiler became animmovable property on assembly and erection atsite as it was removable only on dismantling
Chethar Vessels Ltd. Vs. CCE 2009(241) ELT 580 (T)
MS tanks of various capacities manufactured at siteand attached to earth can neither be removedwithout dismantling nor separable without
destroying. Not liable to duty as these areimmovable property
Prodip Engineering works Vs.CCEx., Kolkata, 2007 (216) ELT 534(Tri. Kolkata)
Installing the storage systems rails flush with floorlevel by digging to trench and refilling it withconcrete etc., at site is a permanent fixture fixed tothe ground which cannot be removed from the place
of installation
Collector of CE Vs. NikhilEquipments Pvt. Ltd., 2004 (165)ELT 487 (S.C.)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
64/84
Particulars Citation
UPS is goods and not an immovable property National Radio & Electronics Co.Ltd. Vs. CCE 1995 (76) ELT 436 (T)
RCC Poles erected for electricity purposes aregoods
APSEB Vs. CCE, 1994 (70) ELT 3(SC)
Machines first assembled and then affixed toground are goods
Wandleside National ConductorsLtd. Vs. CCE, 1996 (84) ELT 419(T)
D.G. set assembled at site is goods andmarketable as such, hence the same is excisable.
The D.G. set is assembled and bolted to theconcrete platform so that its operation isvibration free. The D.G. set could be easilyunbolted and bought and sold. Therefore, D.G.Set assembled at site cannot be held to beimmovable property. They are goods and are
marketable.
Cheran Spinners Ltd. Vs. CC Ex.Coimbatore, 2008 (231) ELT 315
(Tri. Chennai)
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
65/84
The leading judgment in the context is Narne Tulaman Manufacturers Pvt. Ltd.,
Vs. CCE 1988 (38) ELT 566 (S.C.). Their Lordships held that as the Tribunal had
found that the Appellant had fitted a platform, load cells and indicator system
which in the assembled form became a weigh bridge, there was a commercial
commodity, having a distinct name, character and use resulting in manufacture.
The aspect whether the resultant product would become an immovable property
was not argued or considered. Therefore, the general proposition would be that
if the assembly results in new commercial commodity with a distinct name,
character and use, then it would amount to manufacture.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
66/84
In BPL India Ltd. Vs. CCE 2002 (143) ELT 3, the Supreme Court held that assembly
of imported kits of VTR with colour monitor in disassembled condition amounted
to manufacture since the end product had a distinct character and use and the
process of assembly was done by technical experts or skilled persons.
In a recent Supreme Court Judgment in Mallur Siddeswara Spinning Mills (P) Ltd.
Vs. CCE, Coimbatore, 2004 (166) ELT 154, it was held that Generating sets
assembled and installed in the factory from bought out duty paid components
would be dutiable.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
67/84
Dutiability of waste and scrap
Packing, labelling and branding activities
Can the test of change in tariff heading / sub-headings be
adopted for identifying whether a process amounts to
manufacture
Determination of taxable event for charge of duty
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
68/84
UOI Vs Delhi Cloth & General Mills Co.ltd, 1977 (1) ELT J.199
(SC) manufacture implies a change, but every change is
not manufacture and yet change of an article is the result of
treatment, labour and manipulation. But something is
necessary and there must be transformation; a new and
different article must emerge having a distinctive name and
character or use. Also see South Bihar Sugar Mills ltd Vs UOI,
1978 (2) ELT J.336 (SC).
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
69/84
Empire Industries ltd Vs UOI, 1985 (20) ELT 1 (SC) to
constitute manufacture it is not necessary that one should
absolutely make out a new thing because it is well settled
that one cannot absolutely make a thing by hand in the sense
that nobody can create matter by hand (scientifically). It is
transformation of matter into something else that would
amount to manufacture. That something is a question of
degree.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
70/84
Whether that something else is a different
commercial commodity having its distinct
character, use and name and is commercially knownas such, is an important consideration in
determining whether there is a manufacture.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
71/84
UOI Vs Parle Products, 1994 (74) ELT 492 (SC) -
Whether or not something results in manufacture
would depend on the facts of the case but anynumber of processes undertaken which do not
result in a commercially different commodity
cannot result in manufacture.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
72/84
Ujagar Prints Vs UOI, 1988 (38) ELT 535 (SC) Prevalent and
generally accepted test to ascertain whether there was
manufacture was whether the change or the series of
changes brought by application of processes take the
commodity to the point where, commodity can no longer be
regarded as the original commodity but is, instead,
recognised as a distinct and new article that has emerged
because of the result of the processes.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
73/84
There might be borderline cases where either
conclusion can be reached with equal justification.
Insistence on any sharp or intrinsic distinction
between processing and manufacture results in an
over simplification of both and tends to blur theirinterdependence in cases.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
74/84
Dictionary meaning of produce to bring forward, to bring
forth or out, to bring (to a specified condition), to bring into
existence or being, to work up from raw material, manufacture
(material) objects.
Hyderabad Asbestos Ltd Vs UOI, 1980 ELT 735 manufactured
and produced were synonymous same test should be
applied.
Produced used in respect of natural items.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
75/84
Processes which may not amount to manufacture in
their natural meaning
Brought under tax ambit by the artificial definition
Processes mentioned in CETA as manufacture
Third schedule in CETA repacking, re-labelling,
putting or altering retail sale price etc. mostly
consumer goods.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
76/84
Processes which are specified in relation to any goods in
the Section Notes or Chapter Notes to the First Schedule
to CETA;
Mere specification of a process in the Tariff entry not
sufficient;
Should be specifically stated that the process amounts to
manufacture.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
77/84
Chapter / SectionNotes for
Processes amounting to Deemed Manufacture
Ores, Slag and Ash Process of converting ores into concentrate
Marble, Granite,
sandstone, etc
Process of cutting or sawing or sizing or polishing of blocks or
any other process of converting stone blocks into slabs or tiles
Aluminium Tubes& Pipe
The process of drawing or redrawing
Iron and Steel Process of drawing or redrawing a bar, rod, wire rod, round bar
or any other similar article into bright bar.Process of galvanization
Beverage, Spiritand Vinegar
Labelling or relabelling of containers, or, packing or repackingfrom bulk packs to retail packs, or, adoption of any othertreatment to render the product marketable to the consumer
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
78/84
Chapter / Section Notes for Processes amounting to Deemed Manufacture
Misc edible preparations Labelling or re-labelling of containers or re-packingfrom bulk packs to retail packs of pan masala, yeast,sauces, extracts from tea/coffee shall amount to
manufacture
Made up textile articles; sets;worn clothing & worn textilearticles; rags
Affixing brand name, labelling or re-labelling orrepacking from bulk pack to small pack ofreadymade garments (Articles of Apparel) ismanufacture
Natural or coloured pearl;precious or semi preciousstones; precious metals;Imitation jewellery; Coin
Process of refining dore bar
Sound recorders and
reproducers
Recording of sound or other phenomena on audio or
video tapes shall amount to manufacture
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
79/84
Goods specified in Third Schedule to CETA
Packing or repacking in a unit container
Labelling or re-labelling of containers including thedeclaration or alteration of retail sale price on the
container or
Adoption of any other treatment on the goods to
render the product marketable to consumer.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
80/84
Air Liquide North India Pvt. Ltd. Vs CCEx. [2011] 271
ELT 321 (SC)
Relabeling and repacking of gas in small cylinders
Helium gas rendered marketable to ultimate consumers
thereof
Amounts to manufacture
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
81/84
Person who carries on the activity of manufacture.
Job worker
Brand owner not manufacturer Cibatul Ltd Vs UOI,
1978 (22) ELT 302 (SC) principal to principal basis.
Should not be dummy.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
82/84
Basic duty
Special Excise duty
Education Cess
Secondary and Higher Education Cess
National Calamity Contingent Duty Duties under other Acts:
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
83/84
Addl. Excise duty on pan masala and tobacco products
Duty on Medical and Toilet preparations
Addl. duty on mineral products
Other cesses:
Clean energy cess, cess on automobiles, tractors, biris, jute
manufacturers, sugar, tea, tobacco, coffee, paper and paper
board, rubber, mines, limestone and dolomite and manganese
ore.
-
7/28/2019 CENTRAL EXCISE LAW- Adv Thirumalai.pptx
84/84