SOMETIME back I met an IRS probationer from NACEN. She had just joined NACEN three days ago. I asked her what she learnt in NACEN in the three days. She told me that she understood what manufacture is. I told her that this was something that many of her seniors in the Department, the lawmakers and even the highest courts were not very clear about.
Like here is an Assistant Commissioner who way back in 1997 held that the process of sterilization of syringes and needles amounted to manufacture as it was essential to complete manufacture before the products are sold in the market. This being so, he found the process of sterilization to be an integral and inextricable part of the manufacturing process to make the product marketable. He further held that the process of sterilization brings about a transformation of the product by making something non-sterile sterile, sterile.
This case travelled all the way up to the Supreme Court and yesterday the Supreme Court delivered a detailed judgement explaining the concept of manufacture once again - not deciding anything new, but just elucidating the concept based on earlier landmark decisions of the Court.
What is the difference between manufacture and marketability?: Elementary my dear…. A duty of excise is levied on the manufacture of excisable goods. "Excisable goods" are those goods which are included in the schedules of the Central Excise Tariff Act, 1985. "Excisable goods" brings in the concept of goods that are marketable, that is goods capable of being sold in the market. On the other hand, manufacture is distinct from sale-ability. Manufacture takes place on the application of one or more processes. Each process may lead to a change in the goods, but every change does not amount to manufacture. There must be something more - there must be a transformation by which something new and different comes into being, that is, there must now emerge an article which has a distinctive name, character or use.
'Manufacture' as tested in the Supreme Court laboratory:
When transformation does not take place.: Toilet paper remains the same whether in rolls or cut in different shapes: When a finished product cannot conveniently be used in the form in which it happens to be, and it is required to be changed into various shapes and sizes so that it can conveniently be used, no transformation takes place if the character and the end use of the first product continue to be the same. An illustration of this principle is jumbo rolls of tissue paper cut into various shapes and sizes so that they could be used as table napkins, facial tissues and toilet rolls. The Supreme Court held that there was no manufacture as the character and the end use of the tissue paper in the jumbo roll and the tissue paper in the table napkin, facial tissue and toilet roll remains the same. Bumpers and grills of motor vehicles continue to be the same commodity after ED coating which would increase the shelf life of the said bumpers and grills and provide anti rust treatment to the same. No new commodity known to the market as such had come into being merely on account of the value addition of the ED coating. - No manufacture
Retaining of essential character test: In a recent case M/s. Satnam Overseas Ltd. v. Commissioner of Central Excise, New Delhi reported in 2015-TIOL-66-SC-CX, it was held that as the essential character of the product had not changed, there would be no manufacture. In that case, the product was a combination of raw rice, dehydrated vegetables and spices in the name of rice and spice. It was held that the said product in its primary and essential character was sold in the market as rice only, despite the addition of dehydrated vegetables and certain spices.
Test of no commercial user without further process: In Brakes India Ltd. v. Superintendent of Central Excise - 2002-TIOL-858-SC-CX, the commodity in question was brake lining blanks. It was held on facts that such blanks could not be used as brake linings by themselves without the processes of drilling, trimming and chamfering. It was in this situation that the test laid down was that if by adopting a particular process a transformation takes place which makes the product have a character and use of its own which it did not bear earlier, then such process would amount to manufacture irrespective of whether there was a single process or several processes.
The test of integrated process without which manufacture would be impossible or commercially inexpedient: In J.K. Cotton Spg. & Wvg. Mills Co. Ltd. case - 2002-TIOL-116-SC-CT-LB the Supreme Court held that where any particular process is so integrally connected with the ultimate production of goods that but for that process, the manufacture of such goods would be impossible or commercially inexpedient.
The Four way Test:
(1) Where the goods remain exactly the same even after a particular process, there is obviously no manufacture involved.(2) Where the goods remain essentially the same after the particular process, again there can be no manufacture.(3) Where the goods are transformed into something different and/or new after a particular process, but the said goods are not marketable. No manufacture of goods takes place.(4) Where the goods are transformed into goods which are different and/or new after a particular process, such goods being marketable as such. It is in this category that manufacture of goods can be said to take place.
The Supreme Court commented on the fallacy of the Department's manufactured argument - A surgical equipment such as a knife continues to be a surgical knife even after sterilization. If the Department were right, every time such instruments are sterilized, the same surgical instrument is brought forth again and again by way of manufacture and excisable duty is chargeable on the same. This would lead to an absurd result and fly in the face of common sense. If a surgical instrument is being used five times a day, it cannot be said that the same instrument has suffered a process which amounts to manufacture in which case excise duty would be liable to be paid on such instruments five times over on any given day of use.
In this case, the Supreme Court noted that in fact, no transformation of the original articles into different articles at all takes place. Neither the character nor the end use of the syringe and needle has changed post-sterilization. The syringe and needle retains its essential character as such even after sterilization.
We bring you today this highly educative judgement of the Supreme Court delivered yesterday.
Please see Breaking News.
What is flying in the face?
THE expression "Flies in the face of common sense" is taken from an interesting judgment of the House of Lords reported in R v. Secretary of State for the Home Department, (1995) 2 All ER 244. Lord Browne Wilkinson was faced with an argument that Section 171 of the Criminal Justice Act of 1988 vests in the Secretary of State a discretion for bringing into force certain sections of the said Act. It was argued that the Secretary of State had an absolute and unfettered discretion to bring in or not to bring in the said Sections. This argument was rejected stating that it was not only constitutionally dangerous but also flies in the face of common sense (at page 253).
This information was given by the Supreme Court in the above judgement.
An apt usage would be - most of the departmental SCNs fly in the face of common sense.
Customs - New Exchange Rates from Today
CBEC has notified new exchange rates for Imported Goods and for Export Goods with effect from 8th May 2015. The US Dollar is at 64.35 rupees for imports and 63.30 rupees for exports.
Customs - LNG imported by GAIL Exempted
GOVERNMENT has exempted Liquefied natural gas (LNG) and natural gas (NG) when imported by GAIL for supply to a generating company as defined in clause (28) of section 2 of the Electricity Act, 2003 to supply electrical energy or to engage in the business of supplying electrical energy, for generation of electrical energy:
Provided that the exemption shall not be available if such liquefied natural gas (LNG) and natural gas (NG), is used for generation of electrical energy by captive generating plant as defined in clause (8) of section 2 of the Electricity Act, 2003.
What is a Money Bill - Can there be no Lady Speaker of the Lok Sabha?
AS per Article 110 (1) of the Constitution,
A Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely-
(a) the imposition, abolition, remission, alteration or regulation of any tax;(b) the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;(c) the custody of the Consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;(d) the appropriation of moneys out of the Consolidated Fund of India;(e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;(f) the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or(g) any matter incidental to any of the matters specified in sub-clause (a) to (f).
As per Article 110(3), If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final.
As per Article 110(4), There shall be endorsed on every Money Bill when it is transmitted to the Council of States under Article 109, and when it is presented to the President for assent under Article 111, the certificate of the Speaker of the House of the People signed by him that it is a Money Bill.
This "him" was the matter of a debate in the Rajya Sabha yesterday. A Member raised an objection that the Bill had to be signed by him (not her).
The Leader of the House and Finance Minister Mr. Jaitley said, I am still not able to digest the new Marxist argument that because the Constitution requires the Money Bill to be signed by 'him', so a lady Speaker's signature is not adequate. I don't know whether such an argument could be seriously... I am actually shocked by this argument…. If you say this ...... the Speaker must necessarily be a man and cannot be a lady…….Then the natural analogy is that the Speaker can only be a male….
Central Excise Inspector arrested for taking a bribe of Rs. 3500
THE Central Bureau of Investigation (CBI) has arrested an Inspector of Central Excise, Roorkee (Uttarakhand) for demanding and accepting a bribe of Rs. 3500/- from the Complainant.
A case was registered under section 7 of PC Act, 1988 against an Inspector of Central Excise, Roorkee on a complaint. It was alleged that the Inspector was demanding a sum of Rs. 3500/- from the Complainant for Service Tax registration of his firm. CBI laid a trap and the Inspector was arrested in his office while demanding & accepting a bribe of Rs. 3500/- from the Complainant.
The arrested accused was produced yesterday in the Court of Special Judge, CBI Cases, Dehradun and remanded to Judicial Custody.
Theft of Gold from Trichy Customs, CBI searches on - FC also missing
ON the basis of a written complaint by the Commissioner of Customs, Trichy, CBI, Anti Corruption Branch, Chennai has registered a case in the Great Gold Missing case.
The allegation is that a packet said to have contained seized Gold kept in the Strong Room of Customs, Trichy, has been tampered with and the same did not have the requisite weight of 18512.500 grams. When the packet was weighed, it was weighing only 3,580 grams (inclusive of packing materials).
During investigation till now, it is revealed that about 34 Kgs. of gold in three different packets and foreign currency equivalent of about Rs.17 lakhs are missing.
In this regard, searches were conducted at three places. During the searches, incriminating documents, files relating to the seized goods are recovered. The investigation of the case is in progress
No comments:
Post a Comment