- (1.) The question of law which arises for consideration in the present case is whether the activity of mounting of Water Purification and Filteration System (WPFS) on a base frame carried out by M/s Poonam Spark (P) Ltd. amounts to manufacture or not. The aforesaid issue is to be determined in the following factual background: One M/s Perfect Drug Limited (PDL) had been purchasing/importing various components of WPFS classifiable under Tariff Heading 8421. PDL, after importing these materials, supplied the same to the appellant herein. Job work was assigned to the appellant for the assembly of WPFS on behalf of PDL. Appellant takes job charges from PDL. Various parts which were supplied by the PDL to the appellant were as follows: Filter Housing & Cartridge UV Units Timer Mounting Plate & screws Tubings and Fittings
(2.) 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. Show cause notice dated 13.05.1998 was served upon the appellant.
(3.) The appellant submitted its reply taking the defence 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. The appellant also submitted that WPFS are of three types: i) WPFS with Dual Cartridges ii) WPFS with Single Cartridge iii) WPFS with Single cartridge & Electronic Control Unit The filter housing and cartridge 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 following types of Cartridges are used for the above: i) Dirt and Rust Filteration Cartridge ii) Triple Action activated Carbon cartridge. It was submitted that 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.;