Assembling of Cassettes from Finished Components is Manufacture

Brief of the Case

The Hon’ble High Court in the present case held that when the assessee claimed and was granted modvat credit under Rule 57H of the Central Excise Rules at the relevant time itself indicates that for purposes of excise, “the assembling of cassettes amounted to manufacture”.

Facts of the case

The brief facts are that the assessee manufactures cassettes. At the relevant time, the assessee had owned five production units. Two were located at Noida; one at Delhi and two at Namoli and Malanpur (UP). The assessee’s production process entails manufacturing of Audio Magnetic Tapes (AMT) in bulk – an activity carried out in the two Noida units. The assessee had claimed the benefit of Section 80HH and 80I in respect of Namoli Unit and Section 80IA in respect of Malanpur Unit which had been granted from the years 1991-92. In the course of assessment for AY 1994-95, based upon the assessee’s returns, the AO formed an opinion that no manufacturing activity was carried out in Namoli and Malanpur. The assembling of the articles produced at the Noida Unit did not amount to manufacture and that there was other material to indicate functional integrality of all the units. The CIT(A), however, remitted the matter with respect to certain adjustment indicated by him in the order.

Contention of the Assessee

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