Whether assembly amounts to manufacture?

Assembly is a process of putting together a number of items or parts of an item to make a product or item. From a general point of view not all cases of assembly would amount to manufacture in as much as an already manufactured item may be put in a readily usable form. The assembly may take place before the sale or after the sale of manufactured goods and again at the factory gate of the manufacturer or the customer‘s site. It may be done by the manufacturer/buyer/intermediary/technician. In all such cases, the questions that arise are :-

(a) Whether such assembly is manufacture?

(b) Do new goods emerge as a result of assembly?

The leading judgment in this context is Narne Tulaman Manufacturers Pvt. Ltd. v. CCE 1988 (38) E.L.T. 566 (S.C.). Their Lordships held that as the Tribunal had found that the Appellant had fitted a platform, load cells and indicator system which in the assembled form became a weigh bridge, there was a commercial commodity, having a distinct name, character and use resulting in manufacture. The aspect whether the resultant product would become an immovable property was not argued or considered. Therefore, the general proposition would be that if the assembly results in new commercial commodity with a distinct name, character and use, then it would amount to manufacture.

In BPL India Ltd. Vs CCE 2002 (143) ELT 3, the Supreme Court held that assembly of imported kits of VTR with colour monitors imported in disassembled condition amounted to manufacture since the end product had a distinct character and use and the process of assembly was done by technical experts or skilled persons.

In a Supreme Court judgment in Mallur Siddeswara Spinning Mills (P) Ltd. v. CCE, Coimbatore, 2004 (166) E.L.T. 154, it was held that generating sets assembled and installed in the factory from bought out duty paid components would be dutiable.