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Issues involved: Classification and assessment of aluminium pieces subjected to processing, whether they belong to the aluminium section or as component parts of windows and doors, and their liability to duty under Tariff Item No. 68.
In the present case, the Tribunal considered three questions related to the classification and assessment of various products, including fully assembled windows, doors, shutters, and pieces subjected to processing like drilling, punching, and revetting. The focus of the appeal before the Supreme Court was on the classification and assessment of pieces subjected to processing, specifically whether they should be considered as aluminium sections not liable to duty or as component parts assessable under Tariff Item No. 68. The Assistant Collector initially classified the products manufactured at the Bombay factory as excisable under Tariff Item No. 68. The Appellate Tribunal remanded the case for reconsideration, leading to the Appellate Collector classifying the products under T.I. No. 68. Similarly, products from the respondent's factory in Madras were classified as excisable goods under T.I. 68. The Tribunal partially allowed the appeals, ruling in favor of the Department on the first two issues but against the Department on the third issue regarding the classification of pieces subjected to processing. The Tribunal determined that the respondent's activities related to the aluminium pieces did not amount to the manufacture of excisable goods. Citing precedent, the Tribunal emphasized that for an article to be considered goods, it must be something that can ordinarily come to the market. In this case, a clear finding was lacking regarding whether the pieces had acquired a distinct name, character, or use to be classified as goods. The burden of proof was on the Department to establish this, which was not done. Consequently, the Tribunal concluded that the pieces were not subject to excise duty and rejected the Department's claim that they were component parts of standardized frames and doors. The Tribunal further clarified that tailor-made items could not be considered component parts but rather replacements. It noted that in certain circumstances, tailor-made items produced in large quantities could transition into standard items, potentially becoming subject to excise duty as component parts. However, such a determination would require specific evidence and findings by the authorities, which were absent in this case. The Supreme Court found no merit in the Department's appeal and dismissed it, with costs imposed on the parties.
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