Packing and branding bought-out lighting components did not amount to manufacture; extended limitation was also unavailable.

Mere procurement of lamp-shade and light-fitting components, followed by packing them with a logo, brand name and code number into kits, did not amount to manufacture because no new product with a distinct name, character or use emerged. The demand for duty, interest and penalties was therefore unsustainable on merits. The demand was also time-barred because the department had prior notice of the unit's premises and disclosed trading activity, so the extended period of limitation could not be invoked absent legally sustainable suppression. The order confirming duty and penalties was set aside.

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Issues: (i) Whether the appellant's activity of procuring components of lamp shades and light fittings, packing them with logo, brand name and code number, and clearing them as finished kits amounted to manufacture; (ii) Whether the demand was barred by limitation and the extended period under the Central Excise law was available.

Issue (i): Whether the appellant's activity of procuring components of lamp shades and light fittings, packing them with logo, brand name and code number, and clearing them as finished kits amounted to manufacture.

Analysis: The activity was found to consist only of procuring various components of lamp shades, chandeliers and light fittings of a particular design and packing them in cartons after adding logo, brand name and code number. No component was manufactured by the appellant, and the process did not bring into existence a new product having a distinct name, character or use. The reasoning was supported by earlier decisions holding that assembling or packing duty-paid or bought-out parts into kits or lighting items, without emergence of a new commercial product, does not constitute manufacture.

Conclusion: The activity did not amount to manufacture and the duty demand was unsustainable on merits, in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation and the extended period under the Central Excise law was available.

Analysis: The department had been informed that a portion of the factory premises was leased to another firm for trading activity, and the relevant ground plan was also enclosed. On that basis, the authority held that the department was aware of the appellant's existence and activities, so the extended limitation period could not be invoked. The contention that the earlier intimation did not spell out the exact activity was rejected, since it was for the department to verify the nature of the trading activity disclosed.

Conclusion: The demand was time-barred and the extended period of limitation was not available, in favour of the assessee.

Final Conclusion: The order confirming duty, interest and penalties was set aside because the impugned activity was not manufacture and the demand was also barred by limitation.

Ratio Decidendi: Mere procurement, packing, branding and assembling of bought-out components does not amount to manufacture unless a new product with a distinct name, character and use emerges; where the department has prior notice of the unit and its disclosed activity, the extended period of limitation cannot be invoked absent legally sustainable suppression.

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