Repair or reconditioning of used modules is not manufacture unless a new commercial commodity emerges.

Repair or reconditioning of old and used modules did not amount to manufacture because the process did not bring into existence a new and distinct commercial commodity with a separate name, character or use. The modules were dismantled, unusable parts were replaced, and the assemblies were restored to a usable condition, but the same type of module emerged after processing. On that basis, the activity was treated as repair or reconditioning within the excise framework, and no excise duty was leviable; the finding was in favour of the assessee.

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Issues: Whether the processes undertaken on old and used modules received back for repair or reconditioning amounted to manufacture liable to excise duty.

Analysis: The modules were dismantled, unusable parts were replaced, and the assemblies were reconditioned so that the same type of module emerged after the process. Manufacture requires emergence of a new and different commercial commodity with a distinct name, character, or use. Applying this test, the process did not bring into existence a new commercial product. Mere dismantling and restoration to a usable condition did not convert repair or reconditioning into manufacture. The activity was, therefore, treated as repair/reconditioning within the excise framework.

Conclusion: The process did not amount to manufacture and no excise duty was leviable on that activity. The finding is in favour of the assessee.

Ratio Decidendi: Repair or reconditioning of used goods does not amount to manufacture unless the process results in a new and distinct commercial commodity with a separate identity, character, and use.

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