Excisable goods classification of site-assembled diesel generating set upheld, but manufacturer liability failed for want of proof.

A diesel generating set assembled at site from an engine, alternator and other bought-out parts was treated as excisable goods classifiable under Heading 85.02 because installation on a foundation did not, by itself, negate permanence or commercial identity. However, manufacturer liability was not established against the appellants where the evidence showed assembly by another concern pursuant to their purchase order, and mere location of the unit in their premises was insufficient. In the absence of proof that the assembler acted as their hired labour, the duty demand and penalty were set aside.

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Issues: (i) whether the diesel generating set assembled at site was excisable goods and classifiable under Heading 85.02; (ii) whether the appellants could be treated as the manufacturer liable to duty and penalty.

Issue (i): whether the diesel generating set assembled at site was excisable goods and classifiable under Heading 85.02.

Analysis: The Tribunal followed the settled view that a generating set assembled from engine, alternator and other bought-out parts at site is not rendered non-excisable merely because it is fixed in position for functional effectiveness. The test of permanency was not satisfied by the mere fact that the equipment was installed on a foundation, and the assembled unit answered the description of a commercial article falling under the relevant tariff heading.

Conclusion: The diesel generating set was held to be excisable goods classifiable under Heading No. 85.02.

Issue (ii): whether the appellants could be treated as the manufacturer liable to duty and penalty.

Analysis: The evidence showed that the set was assembled by another concern at site pursuant to the appellants' purchase order. Mere location of the assembled unit in the appellants' premises was insufficient to make them the manufacturer. In the absence of proof that the assembling concern acted as hired labour for the appellants, the revenue failed to establish manufacturer status against them.

Conclusion: The appellants were not held liable as manufacturers, and the demand of duty and the penalty were set aside.

Final Conclusion: The decision recognizes the assembled diesel generating set as excisable under the tariff, but grants the appellants relief from the duty demand and penalty because manufacturer liability was not proved against them.

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