2000 (10) TMI 484 - AT - Central Excise

Summary

Issues involved: Whether the assembly of fax machines imported in knocked down condition amounts to manufacture under Section 2(f) of the Central Excise Act.

Summary:
The appeal involved the question of whether the assembly of fax machines imported in knocked down condition constitutes manufacturing under Section 2(f) of the Central Excise Act. The Appellants argued that the assembly did not result in a new product, as the imported components were already facsimile machine parts. They contended that the assembly was merely to restore the machine to its original form. The Respondent, however, relied on Note 6 to Section XVI, asserting that the process undertaken by the Appellants amounted to manufacture. The Tribunal considered the definitions of manufacturing processes and the emergence of a new commercial product with a distinct name, character, and use from the assembly.

The Appellants cited various legal precedents where assembly of imported goods did not amount to manufacture, emphasizing that the components imported were already parts of the facsimile machine. They argued that the process of assembly did not create a new product with different characteristics. In contrast, the Respondent highlighted the importance of Section/Chapter Notes in determining manufacturing activities and contended that the assembly process fell under the definition of manufacture as per Note 6 to Section XVI.

In its decision, the Tribunal analyzed the definitions of manufacturing processes and the transformation of incomplete or unfinished articles into complete or finished products. It noted that the assembly of CKD kits into fax machines resulted in a distinct commercial product with a new name, character, and use. The Tribunal upheld the Respondent's reliance on Note 6 to Section XVI, which clarified that completing or finishing an incomplete or unfinished article amounted to manufacture. The Tribunal rejected the Appellants' arguments based on legal precedents, emphasizing the specific circumstances of the case and the emergence of a new product through the assembly process.

The Tribunal further supported its decision by referencing previous cases where the completion of imported goods into fully manufactured products constituted manufacturing. It highlighted the distinction between imported components and the final assembled product, emphasizing the utility and value added through the assembly process. Ultimately, the Tribunal concluded that the assembly of fax machines imported in knocked down condition constituted manufacturing under Section 2(f) of the Central Excise Act, and therefore, the appeal was rejected.