Central excise duty on unassembled A.D. wet cells was struck down where only carbon/zinc elements were manufactured.

Central excise duty on A.D. wet cells was held unsustainable where the assessee manufactured only the carbon/zinc elements, procured the remaining components from the market, and supplied the cells in unassembled condition. The earlier Tribunal ruling on identical facts had already held that such activity did not amount to manufacture of complete cells for duty purposes, and that determination had attained finality. As the impugned demand proceeded on the rejected assumption that complete wet cells were manufactured, the factual basis for the levy failed and the orders were quashed in favour of the assessee.

---

---

Issues: Whether the demand of central excise duty on A.D. wet cells was sustainable when the assessee manufactured only carbon/zinc elements and procured the remaining components from the market, supplying the cells in unassembled condition.

Analysis: The assessee had earlier succeeded before the Tribunal on identical facts for a previous year, where it was held that manufacture of only carbon/zinc elements, with the remaining parts procured from outside and the cells supplied unassembled, did not amount to manufacture of complete cells so as to attract duty on the finished product. That decision had attained finality and was treated as covering the same controversy for the year in question. The impugned demand rested on the contrary assumption that the assessee manufactured complete A.D. wet cells, but the factual basis for that view was rejected in light of the earlier binding determination on the same manufacturing pattern.

Conclusion: The demand was not sustainable, and the impugned orders were quashed in favour of the assessee.

---