ASSEMBLY FOR SELF USE IS MANUFACTURE AND IS EXCISABLE: SUPREME COURT

The Supreme Court last week dismissed the appeal of Usha Rectifier Corporation challenging the levy of central excise on products which were used for research and development. The company
manufactures electronic equipment. It bought components and assembled them for R&D. The
company argued that there was no manufacture of any product which was marketable and
therefore, it was not liable to pay excise duty. It further contended that the equipment were used
within the factory and it was not taken out of factory gates. The item was dismantled within the
factory itself. Rejecting the argument, the Supreme Court ruled that "even if the equipment were used
for captive consumption and within factory premises, considering that they were sale able and
marketable, duty was payable on the goods." Apart from capitalization of the manufacturing process
in the balance sheet, the company's assertion that the equipment was meant to save foreign exchange
by developing indigenous products, was an admission that the goods were marketable. Such
products would be"deemed to have been removed from the factory premises for consumption."