Manufacture test for composite kits fails where packing and quality checks do not create a new marketable product.

Testing, skin-board packing and common clearance of automotive chains, connecting links and sprockets did not amount to manufacture because the goods retained their separate identity, character and use. The activity at the appellant's unit involved only further quality checks, application of a logo and packing for marketing, with no physical or chemical transformation and no emergence of a new marketable article. The packed items continued to consist of independently usable components, and trade did not treat the common kit as a new product. No new excisable product arose, so the demand and classification as a transmission kit failed.

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Issues: Whether the process of testing, skin-board packing and clearance of automotive chains, connecting links and sprockets in a common kit brought into existence a new excisable product known as a transmission kit.

Analysis: The relevant test was whether the activity resulted in a product having a different name, character and use from its constituents so that the original goods lost their identity and a new marketable article emerged. The chain and connecting links were already manufactured goods, while the sprockets had undergone testing and job-work processes outside the appellant's premises. On receipt, the appellant only conducted further quality checks, applied a logo, and packed the items together for marketing. Such testing and packing did not bring about any physical or chemical transformation at the appellant's unit, nor did it create a new article. The packed kit did not cease to consist of the same separate parts with independent uses, and the trade did not treat the common packing itself as manufacture.

Conclusion: The activity did not amount to manufacture and no new excisable product arose at the appellant's hands. The demand and classification on the footing of a transmission kit failed.

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