Assembly of duty-paid components is not manufacture absent a new excisable product; extended limitation needs wilful suppression.

Fitting duty-paid crane attachments to a duty-paid shovel did not amount to manufacture because no distinct new excisable commodity emerged, and the absence of tariff classification for any alleged new product reinforced that conclusion. The demand also could not be sustained under the extended limitation period because there was no wilful suppression or intent to evade duty; the demand was lower than the Modvat credit available on the attachments. The appeal accordingly succeeded, and the duty demand, confiscation, and penalty were set aside.

---

---

Issues: (i) Whether the process of fitting crane attachments to the shovel resulted in manufacture of a new excisable product liable to central excise duty; (ii) Whether the demand could be sustained by invoking the extended period of limitation in the absence of wilful suppression or intent to evade duty.

Issue (i): Whether the process of fitting crane attachments to the shovel resulted in manufacture of a new excisable product liable to central excise duty.

Analysis: The shovel and the crane attachments were both duty paid. They were assembled for lifting purposes, and no distinct new commodity emerged from the process. The absence of any tariff classification for the alleged new product also supported the conclusion that the department had not established manufacture of an excisable product.

Conclusion: The issue was answered in favour of the assessee. No new product came into existence so as to attract central excise duty.

Issue (ii): Whether the demand could be sustained by invoking the extended period of limitation in the absence of wilful suppression or intent to evade duty.

Analysis: The duty demand was lower than the Modvat credit available on the duty-paid crane attachments. On these facts, there was no basis to infer any intent to evade duty. The extended period under the proviso to Section 11A(1) of the Central Excise Act, 1944 could be invoked only where suppression or misstatement was wilful and with intent to evade duty.

Conclusion: The issue was answered in favour of the assessee. The demand was time-barred and the extended period was not available.

Final Conclusion: The appeal succeeded and the duty demand, confiscation, and penalty were set aside.

Ratio Decidendi: Assembly of duty-paid components does not amount to manufacture unless a new excisable product emerges, and the extended period of limitation cannot be invoked unless suppression or misstatement is wilful and made with intent to evade duty.

---