Assembly of bought-out parts at customers' sites was held not to be manufacture, defeating excise duty and extended limitation.

Mere assembly of bullock carts from bought-out parts with some self-manufactured components at customers' sites was treated as assembly, not manufacture, because there was no evidence that complete carts were manufactured in the factory. On those facts, central excise duty was not attracted. The extended limitation period also could not be invoked because the show cause notice contained no specific allegation of suppression, and the department was already aware that the carts were assembled at customers' sites. The excise demand and penalty were therefore unsustainable, with consequential relief granted.

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Issues: (i) whether the assembly of bullock carts from bought-out and some self-manufactured parts at customers' sites amounted to manufacture so as to attract central excise duty; (ii) whether the demand was barred by limitation under the extended period, in the absence of suppression.

Issue (i): whether the assembly of bullock carts from bought-out and some self-manufactured parts at customers' sites amounted to manufacture so as to attract central excise duty.

Analysis: The charge proceeded on the footing that bullock carts were manufactured in the factory at Pune and that duty was payable on the total clearances. The record showed, however, that only some parts were manufactured by the appellants and the remaining parts were purchased from the market, after which the carts were assembled at the customers' sites. There was no evidence from the department to show that the assembly took place in the factory. On these facts, the activity was treated as mere assembly of bought-out items with some self-manufactured parts, which did not amount to manufacture within the meaning of the excise law.

Conclusion: The appellants were not liable to be treated as manufacturers of bullock carts for excise duty purposes on these facts.

Issue (ii): whether the demand was barred by limitation under the extended period, in the absence of suppression.

Analysis: The show cause notice was issued for clearances covering earlier years, but it contained no allegation of suppression with particulars. The notice itself referred to correspondence showing that the department was aware of the appellants' stand that they were only assembling carts at the customers' sites. In the absence of evidence of suppression or clandestine conduct, the extended period could not be invoked.

Conclusion: The demand was time-barred and the extended limitation period was not available to the department.

Final Conclusion: The central excise demand and penalty could not be sustained, and the appeal was allowed with consequential relief.

Ratio Decidendi: Mere assembly of bought-out goods with some self-manufactured parts at a site outside the factory, without evidence of manufacture in the factory or suppression of facts, does not justify excise duty demand or invocation of the extended period of limitation.

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