2008 (3) TMI 294 - AT - Central Excise

Assembly of various parts like filter, candles, containers etc. in a box and then branding - whether the activity of putting various parts of water filter in a box and affixing with the brand name anchor amounts to manufacture, as per provisions of Section 2(f) of the CEA, 1944 no new commodity is coming into existence - parts of water filter remain parts of the water filter till they reach the hand of the customers question is answered in negative revenue s appeal rejected

Summary

Issues involved:
Whether assembling various parts of a water filter in a box under a brand name constitutes manufacturing under Section 2(f) of the Central Excise Act, 1944.

Detailed Analysis:

Issue 1: Activity of assembling water filter parts in a box under a brand name - Manufacturing or not?
The issue in the present appeal revolved around determining whether the activity of assembling various parts of a water filter in a box and affixing them with a brand name "anchor" amounts to manufacturing as per Section 2(f) of the Central Excise Act, 1944. The revenue contended that the assembly of parts resulted in the creation of a new and identifiable product, thus constituting manufacturing. This contention led to the initiation of proceedings against the respondents, culminating in a demand for duty and imposition of a penalty. However, the appellate authority, in its order, noted that the appellant merely purchased the parts of the water filter, assembled them in a box under the brand name 'Anchor,' and sold them without creating a new commodity. The Commissioner (Appeals) emphasized that for an activity to amount to manufacturing, a new distinct commodity must come into existence, which is separately marketed. Relying on precedents such as the Tribunal's decision in Dalmia Industries Ltd. v. C.C.E., Jaipur and Eureka Forbes v. C.C.E., Coimbatore, the appellate authority concluded that the activity did not amount to manufacturing as the parts retained their original identity until assembled by the customers.

Analysis of Tribunal's Decision:
The Tribunal, in its judgment, highlighted the similarity between the facts of the present case and the case of Eureka Forbes v. C.C.E., Coimbatore. In the Eureka Forbes case, assembling water filter components in a carton for marketing under the brand name "Aquaguard" was held not to constitute manufacturing. Drawing from this precedent and the legal principles established therein, the Tribunal rejected the revenue's appeal, affirming that the activity of assembling water filter parts in a box under a brand name did not amount to manufacturing. By aligning with the precedent and the legal interpretation provided in previous cases, the Tribunal upheld the decision that the mere assembly of parts without creating a new distinct commodity did not meet the threshold for manufacturing under the Central Excise Act, 1944.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Ahmedabad centered on the interpretation of whether assembling various parts of a water filter in a box under a brand name constituted manufacturing under the Central Excise Act, 1944. Through a detailed analysis of the facts, legal principles, and precedents, the Tribunal concluded that the activity in question did not amount to manufacturing, as it did not result in the creation of a new distinct commodity separate from its individual parts. The decision underscored the importance of considering the commercial identity and marketability of the assembled product in determining the manufacturing status, aligning with established legal precedents and principles.