Manufacture – Grouping or fitting together of imported modules into photocopier machines does not amount to ‘manufacture’

The Supreme Court has held that the grouping and, to whatever extent, the fitting together of imported modules into Photocopier machines in the warehouses, to meet a customer’s need, does not amount to ‘manufacture’ under Section 2(f) of the Central Excise Act, 1944.

Dismissing the appeal filed by the Revenue department against the CESTAT decision, the Court in Commissioner v. Xerox India Ltd. & Ors., a dispute for the period from April 2002 and November 2006, observed the following:

• As per the Tribunal, the activity is one of pinning and plugging different parts together, which is called ‘kitting’ to make a complete set as per the customer’s specification.

• Activity does not fall within the definition of Section 2(f) of the Central Excise Act.

• Goods were imported, classified and assessed as complete machines under Heading 8471, and were cleared from the warehouse in the sets and in the original packaging in which they were received.

• Revenue cannot treat the goods as complete machines for levying customs duty including CVD, and as incomplete articles for attracting Note 6 of Section XVI of the Central Excise Tariff Act, 1985.

• Rule 2(a) of the General Rules for the Interpretation of the Schedule does not answer the question whether a process amounts to manufacture.

• Revenue failed to establish that in the simple process of unpacking, plugging or pinning, the imported modules are changing the head under which they are imported.

Upholding the Tribunal’s decision, the Apex Court in its Judgement dated 5 August 2026 observed that the Tribunal’s findings were not perverse, rested upon evidence, and were arrived at by careful consideration of the material on record.

The assessee was represented by Lakshmikumaran & Sridharan Attorneys here.