Manufacture test for assembled goods: putting finished items together in a pouch did not create a new product.

Bringing fully finished imported scanners and procured keyboard wedges/decoders together in a pouch and clearing them as a barcode system did not amount to manufacture under Note 6 to Section XVI of the Central Excise Tariff Act, 1985. Manufacture requires a transformation that results in a new product with a distinct name, character or use in the commercial world, and mere assembly or packing of duty-paid finished goods into a kit does not satisfy that test. As the items retained their essential character and use, the duty demand based on alleged manufacture was unsustainable and the assessee succeeded with consequential relief.

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Issues: Whether placing imported scanners and procured keyboard wedges/decoders together in a pouch and clearing them as a barcode system amounts to manufacture under Note 6 to Section XVI of the Central Excise Tariff Act, 1985.

Analysis: Manufacture requires a transformation resulting in a new and different product having a distinct name, character or use in the commercial world. Mere putting together of two fully finished items does not, by itself, bring into existence a new article. The items here were complete goods, assembled in a pouch and cleared as such, and the process did not alter their essential character or use. The reasoning followed the settled principle that assembly or packing of duty-paid finished goods into a kit does not necessarily constitute manufacture.

Conclusion: The activity did not amount to manufacture and the issue was decided in favour of the assessee.

Final Conclusion: The duty demand based on alleged manufacture could not be sustained, and the appeals succeeded with consequential relief.

Ratio Decidendi: Bringing together complete goods without producing a commercially new product having a distinct name, character or use does not amount to manufacture.

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