Composite pump set manufacture is established when components form a distinct commercial product with separate identity and use.

Packing and clearance of a pump, an I.C. engine and a mounting platform as a power driven pump set amounts to manufacture where the assembled unit emerges as a composite product with a distinct commercial identity, name and use. The tariff treatment of power driven pumps under Chapter Heading 84.13 and the departmental circular recognising an I.C. engine as an integral part of such a set support that conclusion. Whether the goods are cleared fully assembled or in separable parts is only a matter of packing and transport and does not prevent manufacture. The clearance of the composite pump set is therefore treated as a new product different from its components, and the engines cleared with it are eligible for exemption under Notification No. 6/2002.

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Issues: Whether the packing and clearance of a pump, an IC engine and a mounting platform as a power driven pump set amounted to manufacture, and whether the engines cleared along with such pump sets were eligible for exemption under Notification No. 6/2002.

Analysis: The item cleared by the appellant was treated in trade, invoice description and tariff practice as a power driven pump set. The tariff itself recognized power driven pumps as a separately excisable product under Chapter Heading 84.13, and the departmental circular stated that an I.C. engine may be treated as an integral part of a power driven pump set. The decision emphasized that whether the unit was cleared as fully assembled or in separable parts was only a matter of packing and transport, since the essential result was the emergence of a composite product with a distinct commercial identity and use. Applying the settled concept of manufacture, the assembled pump set was held to be a new product different from its components, and the circular was held relevant to the issue of manufacture as well as classification.

Conclusion: The clearance amounted to manufacture of power driven pump sets, and the appellant was entitled to exemption for the IC engines under Notification No. 6/2002.

Ratio Decidendi: Where components are put together and cleared as a composite product that has a distinct commercial identity, name and use, manufacture is established even if the product is cleared in separable form, and a classification clarification covering the composite product can be relevant to the manufacture issue.

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