Manufacture test for water purifier assembly rejected where no distinct product or marketable article emerged.

Assembling and repacking bought-out parts of a water purifier did not amount to manufacture because the process did not bring into existence a new product with a distinct name, character or use. The Tribunal treated the appliance as already a complete product on receipt, with the pre-filter only marginally improving performance, and held that Section Note 6 of Section XVI applied only where an incomplete or unfinished article is converted into a complete article. It also found no creation of a commercially distinct or marketable article, so central excise duty and penalty could not be sustained.

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Issues: Whether assembling and repacking bought-out parts of a water purifier into the product marketed as Aqua Guard ST-2000 amounted to manufacture and attracted central excise duty.

Analysis: The Tribunal applied the settled test of manufacture, namely whether the process brings into existence a new product having a distinct name, character and use. It held that the appliance as received was already classifiable as a complete product and that the pre-filter only marginally improved its performance. Section Note 6 of Section XVI of the Central Excise Tariff Act, 1985 applied only where an incomplete or unfinished article is converted into a complete article, and on the facts the note had no application. The Tribunal also noted that the activity did not confer marketability or create a commercially distinct article.

Conclusion: The activity did not amount to manufacture, and the duty demand and penalty could not be sustained. The appeal was allowed and the impugned order was set aside.

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