2016 (12) TMI 1691 - AT - Central Excise

Manufacture - installing all items of Computer and connecting them by cord - whether the process amounting to manufacture? - Held that - After receiving at the customer s end while installing the cable of the monitor and key board need to be connect with the CPU. This activity does not amount to manufacture as whole computer is already manufactured items by way of assemble of various components and in the manufactured condition, it is bought and sold by the appellant. There is no activity carried out by the appellant which amounts to manufacture of some new and distinct product - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the activity of connecting computer components amounts to manufacturing?

Analysis:
The case involved the appellant purchasing and selling Computer CPU, Monitor, Keyboards, Hard Disk, and CD Drive. The Department contended that connecting these items at the consumer's site amounted to the manufacture of a computer. The Commissioner (Appeals) upheld the order-in-original, leading the appellant to appeal before the Tribunal.

The Tribunal noted that the appellant sold the items as they were without any additional activity. While installing at the consumer's end, connecting cables of the monitor and keyboard to the CPU was necessary. The Tribunal held that this activity did not constitute manufacturing, as the whole computer was already assembled and sold in that condition. Referring to past judgments, the Tribunal established that the activity of connecting components did not amount to manufacturing computer systems.

Regarding the judgments cited by the Assistant Commissioner, the Tribunal found them inapplicable since those cases involved the assembly of computers with various components, unlike the present case where no assembly occurred. Consequently, the Tribunal concluded that the impugned order was unsustainable, setting it aside and allowing the appeal.

In summary, the Tribunal ruled that the appellant's activity of connecting computer components did not amount to manufacturing a new product. Therefore, the impugned order was deemed unsustainable, and the appeal was allowed.