Whether grading and inscription of diamonds by the appellant (IIDGR India Private Limited) would amount to manufacture under Central Excise legislation.

PJ/Case Law/2018-2019/3469

Case:INTERNATIONAL INSTITUTE OF DIAMOND GRADING & RESEARCH INDIA P. LTD.

Citation: 2015 (326) E.L.T. 388 (A.A.R.).

Issue: Whether grading and inscription of diamonds by the appellant (IIDGR India Private Limited) would amount to manufacture under Central Excise legislation.

Brief facts: The Applicant describes their activity as getting the diamonds from overseas for processing. The activities which are undertaken by IIDGR include the activity of Grading. In this activity, IIDGR grades the diamonds which have been imported or received by them in respect of their Colour, Clarity, Cut and their Weight in Carats. The second activity undertaken is that of Inscription. Inscription of diamonds” service means applying the “Forevermark”; a unique identification/inscription number on the diamonds that is not even visible to the naked eye to ensure that the product is securely traceable. It is important to note that with this, a customer is able to confirm that the Diamond is genuine in terms of its authenticity. The activity of inscription is proposed to be carried out through equipment procured from De Beers UK Limited, a related party under the same ultimate ownership as IIDGR India and a third party company (Girdle Inscription). The two main types of inscription are girdle inscription and table inscription.”
Respondent’s Contention and Judgement: After considering the facts it can be said that the applicant does not manufacture the diamonds in the sense that it does not chemically bring out the diamonds and it is only the natural diamonds with which the applicant deals. Therefore, even by way of common sense this cannot amount to a ‘manufacturing activity’. All that the applicant does is, besides it undertakes the activity of grading the diamonds, it also does some activity of inscription because of which the essential character of the diamonds does not change and it still remains the diamond. It is thus clear that none of these activities could amount to the manufacture of diamonds so as to invite the provisions of Central Excise Act.

Decision:The activity undertaken by the applicant does not amount to manufacture and, hence, will not attract the provisions of Central Excise.

Comment: The Gist of the case is that Grading and Inscription of Diamonds would not amount to any sort of Manufacture

Prepared by: Adit Gupta.

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PJ/Case Law/2018-2019/3469

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