The supreme court has ruled that the job work activity of mounting of Water Purification and Filteration System (WPFS) on a base frame carried out by assessee amounted to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944.

Case Details:
Case No. : Civil Appeal No. 6692/2004 and 2684/2012
Parties: M/s Poonam Spark (P) Ltd. (Appellant) vs Commissioner of Central Excise (Respondent)
Date of Judgment: 29-07-2015
Coram: Justice N. V. Ramana and Justice A. K. Sikri

Question:
Whether the activity of mounting of Water Purification and Filteration System (WPFS) on a base frame carried out by assessee amounted to manufacture or not?

Case Law Referred:
M/s Satnam Overseas Ltd. v. Commissioner of Central Excise, New Delhi 2015-TIOL-66-SC-CX
Servo-Med Industries Pvt. Ltd. v. Commissioner of Central Excise, Mumbai 2015 (319) E.L.T. 578 (S.C.)

Facts of the Case:
M/s Perfect Drug Limited (PDL) after importing supplied various parts (Filter housing & Cartridge, UV Units, Timer, Mounting Plate & screws and Tubings and Fittings) to  appellant for the job work of the assembly of WPFS on behalf of PDL. According to the Department of Revenue, the aforesaid work being carried out by the appellant, namely, assemble of the components resulted into a new product known as WPFS having different name and character and it amounted to “manufacture” as per Section 2(f) of the Central Excise Act, 1944 and, therefore, appellant was liable to pay excise duty.

Arguments of the Appellants:
The appellant submitted that it was only carrying out the job work of WPFS on the base frame and, therefore, it did not amount to manufacture of any new product.

Supreme Court's Observations:
The Tribunal has recorded the finding that PDL supplied the following materials to the appellant:
(i) Filter Housing Cartridges
(ii) U.V. Units
(iii) Timer
(iv) Mounting Plate& Screws
(v) Tubings and Fittings

The appellants then make the following types of Water Purification & Filteration System (WPFS):
(i) WPFS with Dual Cartridges,
(ii) WPFS with Single Cartridge,
(iii) WPFS with Single Cartridge & Electronic Control Unit.

It is also pointed out that Filter Housing and Cartridges are imported by PDL through M/s Cuno Asia Pte Ltd, Singapore and UV based Filteration and Purification unit from Rathi Brothers/ IWT Poona. The choice of cartridge depends upon the basis of filteration, the operating conditions and the customer's ability to afford the particular type of cartridge, etc. The appellants undertake the job of assembling all the items received from M/s. Perfect Drug Ltd. on a base plate and thus brings into existence a new and commercially different commodity known as Water Purification& Filteration System.

It is on this basis, a finding of fact is arrived at by all the three Authorities that the activity undertaken by the appellant amounts to “manufacture” within the meaning of Section 2(f) of the Central Excise Act, 1944, since the end result of the process or activity resulted in new and different commercial product. We, thus, are of the opinion that on the basis of the aforesaid findings which are concurrent findings of all the Courts below, the correct legal principle has been applied.

Accordingly, no merit is found in these appeals, which we hereby dismiss with cost.

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