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2026 Supreme(Online)(CESTAT) 814
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE REGIONAL BENCH - COURT NO. 2
P.A. Augustian, Judicial Member, Pullela Nageswara Rao, Technical Member
Manvish E-tech Pvt Ltd – Appellant
Versus
Commissioner Of Central Tax Bangalore North – Respondent
Central Excise Appeal No. 20156 of 2022
For the Appellants/Petitioners: B.G. Chidananda Urs
For the Respondents: Vinod Kumar Garhwal
Activities treated as services (job work) where service tax is paid do not constitute 'manufacture' for excise purposes; handheld data processing devices are classifiable under CETH 8471 rather than the residual entry CETH 85437099.
Headnote:The dispute concerns the classification of time attendance, access control, and handheld data collection devices under the Central Excise Tariff and whether the appellant's activities amounted to 'manufacture'. The revenue alleged that the appellant manufactured these goods under the brand 'MiFaun' without paying duty, classifying them under CETH 85437099. The appellant contended that they imported assembled tablets, added biometric sensors, and outsourced soldering to a job worker, paying service tax on such activities, and argued for classification under CETH 8471. The primary issues were whether the appellant's activities constituted manufacture and whether the products were correctly classified under the residual entry CETH 85437099. The court reasoned that since the activity was treated as a service for which service tax was paid, it cannot be termed manufacture at the appellant's end. Regarding classification, the court held that handheld computers and data processing units are not 'electrical machines and apparatus' under the residual entry of CETH 85437099 but fall under CETH 8471, citing precedents that classify computer adjuncts and portable scanners under the same heading. Accordingly, the impugned order is set aside, and the Appeal is allowed with consequential relief, if any, in accordance with law.
PER: P.A. AUGUSTIAN
This appeal is filed against Order-in-Appeal No. 179&180/2021- 21-CT dated 04.03.2021 passed by the Commissioner of Central Tax (Appeals - II), Bangalore.
The issue in the present appeal is classification of the product and the excise duty liability on the appellant. Alleging that the Appellant had developed, manufactured and cleared sophisticated hi-tech products such as time attendance and access control devices and handheld data collection devices without payment of duty under the brand name of “MiFaun” investigation was commenced and Adjudication Authority as per order dated 14.02.2019 held that the appellant is manufacturing such goods and confirmed the demand for the period from 2015-16 to 2016-17 with interest and also imposed penalty under various provisions of law. Aggrieved by said order, an appeal was filed before the Commissioner (Appeals) and Commissioner (Appeals) as per the impugned order rejected the appeal. Aggrieved by said order, present appeal is filed.
When the appeal came up for hearing, Learned Counsel for the appellant draws our attention to the show cause notice and submits that during investigation, statements were recorded regarding all the products. The products are manufactured and brought to appellants for distribution to customers subject to alterations and modifications. The product imported by the appellant is fully assembled tablets to which the fingerprint biometric sensors have been attached to USB port by them and then distributed to the customers. Further it is stated that the appellant has no manufacturing facility on their own. In respect of handheld device, the appellant had procured / imported the necessary raw materials components including PCB’s etc., and supplied to M/s. Vinyas, Mysore for soldering and manufacturing. Appellant is only loading firmware on to the devices. Learned Counsel also draws our attention to the Job Work Invoice Cum Delivery Challan issued by the M/s. Vinyas Innovative Technologies Pvt. Ltd., and by considering the activity as falling under service tax, they have paid service tax @12%. Considering the facts and circumstances of the case, the activity carried by the appellant does not amount to manufacture and even if it is considered as manufacture, it is carried out by the job worker and demand can made only on job worker M/s. Vinyas, Mysore for soldering and manufacturing. However, they have paid service tax on such activities by considering that such activities are falling under service. Learned Counsel further submits that the issue is not more res integra and relied on the following decisions:-
i. Superintendent of Central Excise and others Vs. VAC Met Corpn. Pvt. Ltd. - 1985 (22) ELT 330 (SC)
ii. Collector of Customs Vs. Bhor Industries – 1988 (35) ELT 346 (SC)
iii. SPA Computers Ltd. Vs. Commissioner of C. Ex., Bangalore – 1999 (110) ELT 689 (Tribunal)
iv. Gestetner (India) Ltd. Vs. Commissioner of Customs, Mumbai – 2006 (197) E.L.T 498 (Tri. – Mumbai.)
v. Essae Teyaoka Ltd. Vs. Commissioner of Customs, Bangalore – 2001 (130) E.L.T 831 (Tri. – Bang.)
vi. Xerox India Ltd. Vs. Commissioner of Customs, Mumbai – 2010 (260) ELT 161 (SC)
vii. Caprihans India Ltd. Vs. Commissioner of Central Excise – 2017 (51) STR 239 (SC)
As regards classification, Learned Counsel also draws our attention to Chapter 85 and invoice issued by the Appellant which clearly shows description as "MiFaun" Handheld Computer Model: Mi004". Thus, the goods are classifiable as data processing machine falling under Central Excise Tariff Heading (CETH) 8471. The alleged classification adopted to demand duty under Central Excise Tariff Heading (CETH) 85437099 is not supported by the nature of goods sold by the Appellant. The Central Excise Tariff Heading (CETH) 85437099 reads as "ELECTRIC MACHINES AND APPARATUS HAVING INDIVIDUAL FUNCTIONS, NOT SPECIFIED OR INCLUDED ELSEWHERE IN THIS CHAPTER" which is construed as a residual entry for Electrica
