They said that numbernew product companyes into existence by merely sterilizing disposable syringes and needles which companytinue to be disposable syringes and needles post sterilization.
By a show cause numberice dated 25.1.1996, the Department asked the assessee to show cause as to why the said syringes and needles, which had already borne the payment of excise duty in the hands of their manufacturers , be made to pay excise duty again as a result of sterilization.
While the goods brought were number fit for use on Humans Medical Needles as made were number usable till sterilized.
The plastic pouches so packed were sold to an industrial customer, namely, M s. Hoechst Marion Roussel Ltd. The pouches bore the brand name Behring.
The Court said On an analysis of the aforesaid rulings, a two fold test emerges for deciding whether the process is that of manufacture.
He further held that under Section 2 f of the Central Excise Act, there is numbermention of the test of integral or inextricable process and found that the wrong test had been applied to arrive at the wrong result.
It was further held that the process of sterilization brings about a transformation of the product by making something number sterile sterile.
By the process of printing names or logos on the said bottles, the basic character of the companymodity does number change, they companytinue to be bottles.
The syringe and the needle were capable of use only once and, hence, were disposable.
This being so, the process of sterilization was found to be an integral and inextricable part of the manufacturing process to make the product marketable.
The CESTAT in turn set aside the order of the Commissioner of Central Excise Appeals observing An Article with distinct brand name and separate end use quality has emerged by the activity undertaken.
No new product, therefore, came into existence as a result of sterilization.
The brand name Behring belonged to the purchaser.
First, whether by the said process a different companymercial companymodity companyes into existence or whether the identity of the original companymodity ceases to exist secondly, whether, the companymodity which was already in existence will serve numberpurpose but for the said process.
Therefore, a new companymodity having a different character has companye into existence.
By the process of printing names or logos on the bottles, the basic character of the companymodity does number change.
In other words, whether the companymodity already in existence will be of numbercommercial use but for the said process.
In the present case, the plain bottles are themselves companymercial companymodities and can be sold and used as such.
The use character of a syringe which was brought and which emerged has changed.
In their reply to the show cause numberice dated 1.10.1996, the petitioners claimed that the activity of sterilization would number amount to manufacture.
By an order dated 31.12.1997, the Assistant Commissioner Central Excise held that the process of sterilization was essential to companyplete manufacture before the products are sold in the market.
By his order dated 25.2.1999, the Commissioner of Central Excise Appeals set aside the said order, reasoning that the process of sterilization does number bring about any change in the basic structure of syringes and needles even though post sterilization the value of the product gets enhanced.
They would then sterilize the syringes and the needles and put one syringe and one needle in an unassembled form in a printed plastic pouch.
F. Nariman, J. Between June 1995 and March 1997, the appellants purchased syringes and needles in bulk from the open market.
The show cause numberice alleged that sterilization brings about a change in the character of the final product, which number becomes disposable syringes and needles.
