Case Law Details

Case Name : M/s Poonam Spark P. Ltd Vs CCEx (Supreme Court of India)
Appeal Number : Civil Appeal No. 6692 of 2004
Date of Judgement/Order : 29/07/2015
Related Assessment Year :
Courts : Supreme Court of India (999)

Brief of the case:

The Hon’ble Supreme Court in the case of Poonam Spark Limited held that the process of assembling various parts bringing into existence Water Purification & Filtration System amounts to manufacture as the assembled component is different commercially known product with distinctive use.

Facts of the case:

  • The assessee company undertaken the job work of assembling various parts supplied by the supplier and the parts when assembled called as Water Purification and Filtration System (WPFS).
  • Department alleged the said assembly to be a manufacture because the different components assembling result into a new product known as WPFS having different name and character.

Therefore, issued show cause notice demanding duty and equivalent penalty.

  • The findings of department was upheld by CCE (A) and CESTAT. Now, the assessee is in in appeal before the Supreme Court against the order of CESTAT.

Contention of the Assessee:

  • The assessee claimed that the assembling of various parts/components has not resulted in any change in the characteristics of such components and the interconnection merely facilitated use of filtration system by the customers.
  • The various components can be simply placed on a wall near the water supply point of soft drink vending machine and connected to get the desired quality of water.
  • The interconnection facilitated by the assembly (mere tightening of nuts) make the processing of drinks convenient and also rule out the possible risk of damage to plaster of wall. The customer is to simply place or affix the base frame near the water supply point and connect the WPFS to the tap to get the desired quality of water.
  • This is similar to fixing a water filter on the Kitchen Wall near the tap.

Contention of the Revenue:

  • The assembling of components supplied by Perfect Drug Limited (PDL) resulted into a different product called as WIFS, having a different use.
  • The process of assembling has changed the way in functioning of the various components so assembled as the WIFS has proved to be more convenient to obtain the desired quality of soft drinks.
  • Thus, the change caused by assembling giving rise to a new product is manufacture within the definition of sec 2(f) of the Central Excise Act, 1944 and thus, liable to excise duty.

Decision of the Hon’ble Supreme Court:

  • The appellants undertake the job of assembling items received from M/s. Perfect Drug Ltd. on a base plate and resulting into a new and commercially different product known as Water Purification & Filtration System (WIFS).
  • The plea of the assessee that the components in isolation can also serve the desired purpose but not that conveniently is not acceptable because the more convenience provided by WIFS (assembled product) is in itself a different use.
  • Thus, the process of assembling bringing new product into existence with some different use is manufacture and liable to duty.
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Type : Judiciary (12080)

0 responses to “Process of assembling bringing a change in name & use of components amounts to manufacture- SC”

  1. K.P.SUBRAMANIAN says:


  2. Kanwal Juneja says:

    Judgement of honour able S C of poonam spark will be helpful in various cases
    Thanks for updat

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