1985 (1) TMI 332 - AT - Central Excise

Summary

Issues:
Whether the installation of coolers by a corporation for its office premises, using separately purchased exhaust fans and water pumps, constitutes manufacturing liable for Central Excise duty.

Analysis:
The main issue in this case was whether the installation of coolers by a corporation using separately purchased components would be considered manufacturing liable for Central Excise duty. The appellant argued that their primary function was life insurance, not manufacturing, and thus they should not be liable for excise duty. They contended that excise duty is only payable by those engaged in the business of manufacturing goods. The appellant also highlighted that the coolers were not offered for sale as ready-assembled units, as required by the relevant Tariff Item 29A(2).

The respondent, on the other hand, argued that the corporation, by assembling the exhaust fans and water pumps to create coolers, was engaging in manufacturing as per the Central Excises and Salt Act. They emphasized that the definition of "manufacturer" includes those who engage in production or manufacture on their own account, regardless of continuous engagement in manufacturing for profit. The respondent cited a previous decision that clarified that open market sale or standardized mass production is not necessary to establish the excisable character of goods.

The tribunal carefully considered both arguments and referred to a judgment by the Hon'ble Allahabad High Court, which emphasized that excise duty is applicable only to goods that are ordinarily sold or offered for sale as ready-assembled units. The tribunal agreed with this interpretation and noted that the subject goods in this case were not ordinarily sold or offered for sale as ready-assembled units. The tribunal also highlighted the impracticality of subjecting ordinary citizens who install coolers in their residences to excise duties, emphasizing the requirement of goods being sold or offered for sale as ready-assembled units for excise duty to apply.

In conclusion, the tribunal allowed the appeal, providing relief to the appellants. The judgment emphasized that the subject goods did not meet the criteria of being ordinarily sold or offered for sale as ready-assembled units under the relevant Tariff Item 29A(2), thus not making them liable for Central Excise duty. The tribunal concurred with the decision to allow the appeal, as there was no suggestion or argument that the subject goods would be liable to duty under a different tariff item.