EUREKA FORBES LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants M/s. Eureka Forbes Ltd., Chandigarh have two units one at Zirakpur, Distt. Ropar and another at S.C.O. No. 14, Sector 7C, Chandigarh. They receive water filters (de -polluting equipment water filter -cum -purifier) from Hyderabad M/s. A.P. Industrial Components (APIC for short) in two pieces packed in card board packing. To this item, a pre -filter bowl, Candle, Stop Cock, T -Joint, Nipple, PF Nolle, PF Bowl, PF Clamp, hose clip, nut and nozzles, received from their godown at Delhi are added. The water filter received from APIC is subject to test by passing a water stream through it. After this two stickers are affixed on the unit having monogram mark of the company and the name "Acquaguard ST -2000" and "Eureka Forbes Ltd.". The pre -filter candle and other accessories mentioned above are packed alongwith the filter received from the APIC in a card board box and this product is marketed as Acquaguard ST -1000 and ST -2000 water filter/purifier. The water filter unit received from the APIC is already duty paid under Heading 84.21 of the Central Excise Tariff. The question for consideration is whether the activities undertaken at Zirakpur/Chandigarh by M/s. Eureka Forbes Ltd. will amount to manufacture in terms of Section 2(f) of the Central Excise Act, 1962 read with Note 6 to Section XVI of the Schedule to Central Excise Tariff Act, 1985 and consequently the Central Excise Duty under Section 3 of the Act was liable to be paid by the party. The proceedings were drawn against M/s. Eureka Forbes by the Commissioner of Central Excise, Chandigarh -I which culminated in the Commissioner passing an order dated 11 -12 -1998 confirming a duty totally amounting to Rs. 1,18,97,460.00 on the company. He further imposed a penalty of equivant amount on them besides ordering for confiscation of some units seized from their premises and giving them an option to get the release of the same on payment of redemption fine.

(2.) A separate case was booked against Jaipur Unit of M/s. Eureka Forbes Ltd. on similar facts. In this case, however, the Commissioner of Central Excise, Jaipur vide his order dated 16/17 -10 -1997 held that the water filter cleared by M/s. APIC is fully manufactured; that pre -filter is an accessory and cannot be considered to be an essential or an integral part of the water equipment. He further held that water filter cleared by APIC is "fully manufactured goods" and no further duty is liable to be paid by the party. He accordingly dropped the proceedings drawn against them.

(3.) M /s. Eureka Forbes and the Department both are in appeal against the orders of Commissioner of Central Excise, Chandigarh and Commissioner of Central Excise, Jaipur respectively. We have heard Shri Arshad Hidayatullah, Sr. Advocate for M/s. Eureka Forbes and Shri M.P. Singh, JDR for the Revenue. The ld. Sr. Advocate with the help of a sample unit of the Acquaguard filter -cum -purifier and pictorial diagram explained its construction and working. He stated that the water filter cum purifier (hereinafter referred to as "the filter") consists of: (a) An activated carbon filter located in a Chamber. This consists of the activated carbon cartridge which treats the water, reduces the colour and removes other organic impurities and free gases. This also removes the turbidity. (b) An ultra -violet chamber containing a quartz shield. This destroys harmful bacteria and viruses contained in the water by ultra violet rediation and (c) An electronic monitoring system which constantly checks whether the water coming out of the ultra violet chamber meets the predetermined quality setting. In the event of the quality of water falling below the pre -determined standard a solenoid value shuts off, thereby stopping the flow of water.