Trading of duty-paid replacement parts held not to be manufacture, supporting unconditional waiver of pre-deposit.

Resale of duty-paid rubber seals as replacement parts was treated as trading activity, not manufacture, because the goods had already been cleared by the original manufacturer on payment of duty. On that basis, the proposed levy would have amounted to a second duty demand on the same goods, which was found unsustainable at the prima facie stage. The appellants were therefore regarded as having a strong prima facie case and were granted unconditional waiver of pre-deposit of duty and penalty.

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Issues: Whether the appellants were entitled to unconditional waiver of the pre-deposit of duty and penalty on the ground that resale of duty-paid rubber seals as replacement parts did not amount to manufacture.

Analysis: The seals were first cleared by the manufacturer on payment of duty and were later supplied by the appellants to customers on demand as replacement parts. Such subsequent clearance was treated as a trading activity and not as a fresh manufacturing activity. On that basis, the demand sought to levy duty a second time on the same goods was found unsustainable at the prima facie stage.

Conclusion: The appellants were found to have a strong prima facie case and were granted unconditional waiver of pre-deposit.

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