Embossing unique vehicle registration numbers on already manufactured number plates amounts to manufacture

ORDER NO.  AAR(CX) R01-03/2004 dated 23-02-2004

APPLICATION No. AAR/44/101/2003

Name and address of the applicant 
M/s. Shonkh Technologies International Ltd.,
NIRMAL, 6 Floor,
Nariman Point,
Mumbai-400 021

Present for the Applicant 
Mr. V. Sridharan,
Advocate

Present for the Department
Mr. Sanjeev Sachdeva,
Addl. Director General,
Directorate General of Central
Excise Intelligence, New Delhi .
Mr. S.K.Sawhney,
Addl. Director,
Directorate Genera! of Central  Excise Intelligence,
New Delhi .

ORDER
(By Mr. Justice Syed Shah Mohammed Quadri )

1 . 
This is an application under section 23C of the Central Excise Act, 1944 (for short ‘the Act’) seeking an advance ruling on the question, “whether the process of embossing unique vehicle registration numbers on already manufactured number plates amounts to manufacture.”

2.
The applicant is a resident company registered under the Companies Act, 1956 and proposes to set up a joint venture in India in collaboration with a non-resident, viz. M/s. H.R. International, an independent company registered in Belgium. The applicant would be purchasing high security vehicle registration number plates from manufacturers. It would then manufacture aluminium sheets in coil form which would be flattened and laminated with retro reflective sheets.Thereafter chrome hologram shall be stamped with the hologram hot stamping machine. Thus, various sizes of licence plates would be manufactured; each plate will be having a unique serial number braided on each plate with a laser braiding machine which is a security feature. The embossed plates will then be hot stamped with a foil pre-printed with the word “IND” and laminated plate would be fitted to the vehicles. The plates will be stamped “IND” to comply with the mandatory requirement of the Government directive.  The special feature of these plates is that once such a plate is fitted to a car, it cannot be removed. The applicant submits that the plates would be classifiable under Chapter heading 83.10 of the Central Excise Tariff.

3.
A preliminary objection has been raised by the Commissioner as to the maintainability  of the application on the ground that the question on  which the advance ruling is sought, does not fall under section 23C of the Central Excise Act, 1944. The germane point which arises for consideration is whether the afore-mentioned process would amount to manufacture and the goods thus manufactured fall under Chapter 83.10 of the Central Excise Tariff.      Having perused the application, the material on record and having considered the provisions of sub-section (2) of Section 23C of the Act, we are, prima facie, of the view that the application is liable to be rejected on the ground that the question on which the advance ruling is sought, does not fall under sub-section (2) of Section 23C of the Act. A notice to that effect shall be issued to the applicant under sub-section (2) of Section 23D of the Act.

4.
Mr.V. Sridharan, Advocate, appearing for the applicant, takes notice on the said question as to why the application should not be rejected and submits that he waives issuance of a written notice and would argue the point regarding the maintainability of the application. Heard also the learned Departmental Representative.

5.
It would be useful to read Section 23C of the Act here.

Section 23C. Application for advance ruling —

(1)
An applicant desirous of obtaining an advance ruling under this Chapter may make an application    in such form and in such manner as may be prescribed, stating the   question on which the advance ruling is sought.

(2)
The question on which the advance ruling is sought shall be in respect of, -

(a)
classification of any goods under the Central Excise Tariff  Act, 1985 (5 of 1986);

(b)
applicability of notification issued under sub-  section (1) of  section 5A  having a bearing on the  rate of duty;

(c)
the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act;

(d)
notification issued, in respect of duties of excise   under this Act, the  Central Excise Tariff Act, 1985 (5 of 1986) and any duty chargeable   under any  other law for the time being in force in the same manner as   duty of excise leviable under this Act;

(e)
admissibility of credit of excise duty paid or deemed to have been paid on the goods used in or in   relation to the manufacture of the excisable goods.

Sub-section (2) quoted above, enumerates 5 heads which may form subject matter of a question to seek an advance ruling by the Authority.

6.
The learned counsel, however, submits that the definition of the   advance   ruling read along with clause (a) of Section 23 C (2) would show that the application cannot be rejected on the ground that manufacture is not one of the heads in respect of which advance ruling could be sought. The learned Departmental Representative submits that an advance ruling can be sought only in regard to the liability to pay duty in relation to an activity proposed to be undertaken by the applicant

7.
Clause (b) of Section 23A defines “advance rulings” thus:

“(b) “
advance ruling” means the determination, by the authority of a  question of law or fact specified in the application regarding the liability to   pay duty in relation to an activity proposed to be undertaken, by the applicant;”

The expression “advance ruling” means the determination of a question of law or fact regarding the liability to pay duty in relation to an activity proposed to be undertaken by the applicant. The term ‘activity’ is defined in clause (a) of section 23A to mean production or manufacture of goods. The expression does not postulate determination of a question as to whether the process leading to production of excisable goods amounts to activity or manufacture within the meaning of the Act. In our considered view, the definition of the said expression which, cannot be read in isolation, has to be harmoniously interpreted with the provisions of sub- section (2) of section 23C which specifically enumerates the heads on which the advance ruling can be sought. The determination of the proposed question should therefore be relatable to one of the enumerated heads. Undisputedly, clause (a) of section 23C is regarding “classification of any goods under the Central Excise Tariff Act, 1985.” The stage of  classification arises only after the process of manufacture of goods is over. The classification in clause (a) can by no stretch of imagination take in its fold the process of manufacture as such. If that be so, as the advance ruling is sought on the question as to whether process amounts to manufacture, the question does not fall within any of the heads under sub section (2) of section 23C. The objection has to be sustained. The  petition is accordingly rejected.

Sd/
(Dr. K.N. CHATURVEDI)
MEMBER
Sd/ 
(SOMNATH PAL)
MEMBER
Sd/
(JUSTICE S.S.M.QUADRI)
CHAIRMAN

NEW DELHI
DATED: 23.2.2004

F.No.AAR/44/1 01/2003