Self-use assembly of coolers not treated as manufacture; extended limitation barred absent suppression or intent to evade.

Assembly of desert coolers from duty-paid bought-out parts for exclusive self-use in office premises, and not for sale as ready assembled units, did not amount to excisable manufacture in the relevant tariff context, so no duty was leviable on the activity. The extended limitation period also could not be invoked because the assessee acted under a bona fide belief, the activity was known to departmental officers, and there was no fraud, collusion, wilful misstatement, suppression of facts, or intent to evade duty; the demand was therefore time-barred.

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Issues: (i) Whether assembly of Desert Coolers out of duty-paid components for own use and not for sale amounted to manufacture and attracted excise duty. (ii) Whether the demand was barred by limitation.

Issue (i): Whether assembly of Desert Coolers out of duty-paid components for own use and not for sale amounted to manufacture and attracted excise duty.

Analysis: The coolers were assembled in small numbers from bought-out fans and pumps with the body made from scrap available in the workshop. They were used only in the assessee's offices and were never offered for sale. The applicable principle was that goods assembled for self-use and not marketed as ready assembled units do not fall within excisable manufacture in the relevant tariff context.

Conclusion: The issue was answered in favour of the assessee. The coolers were not excisable and no duty was leviable on their assembly.

Issue (ii): Whether the demand was barred by limitation.

Analysis: The assessee had acted under a bona fide belief that the activity was not dutiable, and the departmental officers were aware of the assembly activity during periodic visits. In the absence of fraud, collusion, wilful misstatement, suppression of facts, or deliberate contravention with intent to evade duty, the extended period could not be invoked.

Conclusion: The issue was answered in favour of the assessee. The demand for the extended period was time-barred.

Final Conclusion: Both substantive questions were decided against the revenue, the duty demand could not survive on merits or on limitation, and the impugned order was set aside.

Ratio Decidendi: Goods assembled from bought-out parts for exclusive self-use and not offered for sale are not excisable in the relevant tariff setting, and the extended limitation period cannot be invoked absent fraud, collusion, wilful misstatement, suppression of facts, or deliberate evasion.

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