Brief Facts of the Case:

- The appellant had supplied the electric motors to the vendors.

-  Vendor has supplied the cooling units (after fitting the electric motors supplied by the appellant) to the appellant.

- Vendors were discharging excise duty on supply of cooling units to the appellant.

- These cooling units were the parts of Split Air conditioner

- Appellant were receiving condensing unit from another source.

- The complete units of split air-conditioners were delivered after putting together condensing units and cooling units along with other associates.

-  Installation and services of complete air conditioners were being done by the sister unit.

- Before delivery of the split air-conditioners, gas is filled in the condenser for carrying out certain checks for leakage of gas.

After considering the various issues involved in the instant case honorable Supreme Court has confirmed the decision of the CESTAT in which it was held that:

"The activity is amounting to manufacture and liable to excise duty". 

(For full text of judgment - please visit 2008 -TMI - 2692 - Supreme Court of India)

 

 

Manufacture classification of supplied cooling units renders them liable to excise duty under the applicable tax framework. Supply and incorporation of cooling units and ancillary items into split air conditioner assemblies-where vendors fit appellant supplied motors, units are combined with condensing units and pre delivery testing is performed-amounts to manufacture and is therefore liable to excise duty because the components are transformed and integrated into a finished product delivered for sale.