Mere assembly of computer components is not manufacture when no new product with distinct identity emerges.

Assembly of duty-paid computer components into a working system was treated as manufacture only if it resulted in a new commodity with a distinct name, character and use. Applying that settled test, the Tribunal found that interconnected computer parts continued to function as a computer system without losing their identity as classifiable units under Heading 84.71, and relied on prior Tribunal authority and the departmental circular on computer networks. Mere assembly did not create a new product, so the activity was not manufacture and no excise duty was payable.

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Issues: Whether assembling various components of computers into a working computer system amounts to manufacture and attracts excise duty.

Analysis: The Tribunal applied the settled test of manufacture, namely whether a new commodity having a distinct name, character and use emerges. It noted that the components of an automatic data processing machine are designed to be interconnected and, when assembled, continue to function as a computer system without losing their identity as units classifiable under Heading 84.71. Relying on prior Tribunal authority and the departmental circular on computer networks, it held that mere assembly of duty-paid components into a working system does not bring into existence a new product.

Conclusion: The activity did not amount to manufacture and no excise duty was payable. The appeal succeeded.

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