Affixation of Brand on the Tools by Embossing / Engraving does not Amount to Manufacture and Hence is Exempted: CESTAT [Read Order]

The Mumbai bench of The Customs Excise and Service Tax Appellate Tribunal ( CESTAT)  has held that a company carrying on business of affixation of brand on the tools by embossing/engraving in a rural area does not amount to ‘manufacture’ and is exempted.

The appellant-assessee in the present case are availing SSI Exemption vide Notification No. 8/2000-C.E. dated 01.03.2000 for the product names spanners under the brand name “Taparia” owned by M/s Taparia Tools Ltd. since the unit is located in rural area. A unit located in such area bearing brand name of another person can avail the above named exemption.

The fact of the process is that the appellants are purchasing unbranded spanner on which they are embossing/ engraving the brand “Taparia”. Thereafter it is sent for job work to various job workers. One job work is heat treatment, the second is shot blasting and the third is plating. All these job work are carried out by individual job worker. Thereafter the spanners are brought to the factory of the appellant and the same are packed and sold.

The department contended that even though the appellants’ factories are situated in rural areas, their major manufacturing processes are carried out by the job workers who are not located in rural areas but urban areas. They further submitted that in order to avail the exemption, the goods should have been manufactured by the assessee located in a rural area.

The appellant assessee on the other hand contended that the assessee was not engaged in the business of manufacturing spanners but they only embossed/ engraved the brand name of “Taparia”. Even if the processes of heat treatment, shot blasting and plating carried by job workers are taken together, the same would not change the form of the product and would not amount to manufacture.

The Tribunal after hearing both the parties held that the appellant is only carrying out affixation of brand on the tools by embossing/engraving and the process does not amount to manufacture and hence the appellant cannot be charged to duty.