Knocked-down office furniture system treated as complete goods; site assembly did not create a new excisable product.

Components cleared in knocked-down condition were treated as a complete pre-designed office furniture system, because the parts supplied together were sufficient to form the identified workstation or furniture system and removal in unassembled form did not alter that character. Site assembly and installation by joining and fixing the pre-existing components did not amount to manufacture, since no new commercially distinct product emerged. As duty had already been discharged at the supplier's stage on the complete system, a second levy on the same goods at the customer's premises was not justified. The duty demand was therefore held unsustainable.

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Issues: (i) Whether the goods cleared by the supplier in knocked down condition constituted a complete office furniture system or only parts of furniture for excise classification and duty purposes; (ii) Whether assembly and installation of those components at the customer's premises amounted to manufacture so as to attract duty again on the same system.

Issue (i): Whether the goods cleared by the supplier in knocked down condition constituted a complete office furniture system or only parts of furniture for excise classification and duty purposes.

Analysis: The clearance from the supplier's factory was for a predetermined furniture system identified by project code, with all necessary components supplied together for a complete work station or office furniture system. The fact that the elements were removed in unassembled form for convenience of transportation did not change the character of the clearance, because the components were sufficient to constitute the complete system and were designed to be assembled into that system at site. The earlier classification adopted at the supplier's end also supported the view that what moved from the factory was furniture system and not mere parts.

Conclusion: The goods were to be treated as a complete office furniture system and not as mere parts of furniture; the classification adopted at the supplier's end could not be ignored.

Issue (ii): Whether assembly and installation of those components at the customer's premises amounted to manufacture so as to attract duty again on the same system.

Analysis: The site activity consisted only of joining and fixing the pre-existing components into place according to the drawing and project code. Such assembly did not bring into existence a new commercially distinct product, and the process could be repeated without altering the essential identity of the goods. Since duty had already been discharged on the complete system at the supplier's stage, a second levy on the same system at the hands of the appellant would amount to levy on the same goods.

Conclusion: The site assembly did not amount to manufacture giving rise to a fresh excisable product, and no further duty was payable by the appellant.

Final Conclusion: The demand of duty was unsustainable and the appeals succeeded with consequential relief, while the alternative pleas were not examined.

Ratio Decidendi: Where components cleared in knocked down condition are sufficient to constitute a complete pre-designed system and are merely assembled at site without emergence of a new commercially distinct product, the clearance is treated as that of the complete system and no second excise duty can be levied on site assembly.

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