Supreme Court clarifies assembly vs. manufacture: Conveyor system not excisable goods.

The Supreme Court held that the conveyor system assembly does not amount to manufacturing excisable goods. Circulars from the Board and a previous judgment were cited to support this. The system becomes immovable property once assembled. The departmental representative's argument that fixing the system to the ground for vibration-free operation does not change this. The system, consisting of various components, is not marketable as a whole and must be disassembled for transport. The appeal was allowed, the previous order set aside, and consequential relief granted if permissible. The judgment clarifies the distinction between assembly and manufacture, emphasizing the immovable nature of the conveyor system once assembled.

---

---

Issues:
1. Whether the conveyor system fabricated by the appellant at the factory amounts to manufacture within the meaning of Section 2(f) of the Act and whether such systems are liable to duty.

Detailed Analysis:
The appellant argued that they do not manufacture any components that go into the fabrication of the conveyor system. They assemble components supplied by different manufacturers at the assembly site. The Supreme Court has held that assembly, fabrication, and erection do not result in the manufacture of excisable goods. Circulars from the Board and a Supreme Court judgment were cited in support. The system becomes immovable property when it assumes its identity as a conveyor system after assembly and erection stages.

2. The contention between the appellant and the departmental representative:
The departmental representative relied on the Commissioner's order, stating that the conveyor system is fixed to the ground only to ensure vibration-free operation.

3. Details of the conveyor system and the assembly process:
The appellant filed an affidavit discussing the components, conveyor system, and the process of erection. The system consists of line shafts, conveyor rollers, conveyors, and weigh scales. The system is used for handling packing parts of cartons within the factory. The system emerges as a culmination of a series of processes, and circulars from the Board explain the duty implications based on the method of erection.

4. Application of Supreme Court judgment and Board's circulars:
The Supreme Court judgment in a similar case emphasized that goods should be marketable as a whole to be liable for excise duty. The conveyor system attains its identity only after the necessary operations to make it workable have taken place. It cannot be transported as a complete system and must be disassembled into parts. The system is considered immovable property, and the process of dismantling does not amount to manufacturing.

5. Conclusion:
The appeal was allowed, the impugned order was set aside, and consequential relief was granted if permitted by law. The judgment clarifies the distinction between assembly and manufacture, emphasizing the immovable nature of the conveyor system once it assumes its identity.

---