Deemed manufacture for packed automobile parts: repacking, labelling and consolidation into marketable units attracted central excise treatment.

Imported and locally procured automobile parts that were inspected, quality-checked, repacked, labelled with part details, and consolidated into master cartons were treated as deemed manufacture under the Central Excise Act, 1944. The contemporaneous verification report and records supported that the processes brought the goods within the statutory definition of manufacture, and the Revenue did not produce independent evidence to show the activities were merely incidental. Accordingly, the resulting challenge to reversal of Cenvat credit could not be sustained, because the treatment of the goods as marketable packed units attracted Section 2(f)(iii).

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Issues: Whether the activities undertaken on imported automobile parts at the National Part Centre and depots, including testing, quality inspection, packing, repacking, labelling and consolidation into master cartons, amounted to deemed manufacture under the Central Excise Act, 1944, with the result that the Revenue's demand for reversal of Cenvat credit could not be sustained.

Analysis: The imported and locally procured automobile parts were received in packed condition, subjected to inspection and quality checks, and then consolidated, repacked and affixed with labels showing part number, quantity, country of origin and other particulars before dispatch. The verification report of the jurisdictional Assistant Commissioner and the contemporaneous records supported the finding that the goods were processed in a manner covered by the statutory definition of manufacture. The Revenue did not adduce independent evidence to displace those findings or to show that the activities were merely incidental and did not amount to manufacture.

Conclusion: The activities fell within the scope of deemed manufacture under Section 2(f)(iii) of the Central Excise Act, 1944, and the Revenue's challenge failed.

Ratio Decidendi: Where imported goods covered by the Third Schedule are packed or repacked in unit containers, labelled, or otherwise treated to render them marketable, the process constitutes deemed manufacture for central excise purposes.

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