Ready-assembled goods test under central excise tariff: coolers assembled at consumers' premises escaped duty, but the penalty remained.

Duty was not exigible under Item 29A(2) of the Central Excise Tariff on coolers assembled at consumers' premises from separately sold component parts, because the entry applied to air-conditioning appliances and coolers ordinarily sold or offered for sale as ready assembled units. Since the final assembly took place only at the consumers' premises, the finished goods did not fall within that description, and the duty demand on those 22 coolers was set aside. The penalty, however, was upheld because the record showed manufacturing activity in respect of other coolers and no sufficient ground was made out to interfere with that aspect.

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Issues: (i) whether duty was exigible under Item 29A(2) of the Central Excise Tariff on 22 coolers assembled at consumers' premises from separately sold component parts; (ii) whether the penalty imposed required interference.

Issue (i): whether duty was exigible under Item 29A(2) of the Central Excise Tariff on 22 coolers assembled at consumers' premises from separately sold component parts.

Analysis: Item 29A(2) applied to air-conditioning appliances and coolers ordinarily sold or offered for sale as ready assembled units. The component parts were sold separately and the final assembly was carried out at consumers' premises, either by the appellant or through another agency. On these facts, the finished goods could not be treated as ready assembled units ordinarily sold or offered for sale within the meaning of the item.

Conclusion: The demand of duty on the 22 coolers was not sustainable and was set aside in favour of the assessee.

Issue (ii): whether the penalty imposed required interference.

Analysis: The record showed manufacturing activity in respect of other coolers, and the penalty imposed was modest. No sufficient ground was made out to interfere with that part of the order.

Conclusion: The penalty was upheld and no relief was granted on that aspect.

Final Conclusion: The demand of duty failed, but the penalty survived, so the appeal succeeded only in part.

Ratio Decidendi: Goods assembled at the consumers' premises from separately sold parts do not attract duty under a tariff entry limited to appliances ordinarily sold as ready assembled units.

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