FEDDERS LLOYD CORPORATION LTD. versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI

Citation: [2007] 12 S.C.R. 784 · Decided: 03-12-2007 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
FEDDERS LLOYD CORPORATION LTD. 
v. 
COMMISSIONER OF CENTRAL EXCISE, MUMBAI 
DECEMBER 3, 2007 
(ASHOK BHAN AND V.S. SIRPURKAR, JJ.] 
Central Excise Act, 1944; S. 2(j)/Central Excise Tariff Act, 1985; 
Tariff Heading 84.14: 
Evasion of excise duty-Manufacturing process-Manufacturing 
of split air conditioner from condensing units manufactured by assessee 
and cooling units procured from market-Levy of excise duty-Held: 
Cooling units and condensing units after joining with pipe kits etc. 
D fanction as air-conditioner unit-Which is commercially a new article, 
split air-conditioner and is different from its constituent units, thus, 
classifiable under Tariff Heading 84.15 of the Central Excise Tariff 
Act-R. 2(a) not attracted-Rules of Interpretation-r. 2(a). 
E 
Words and Phrases: 
'Manufacture '-Meaning of 
The question arose for determination in these appeals was as 
to whether fabrication of split air-conditioner from the condensing 
unit manufactured by the assessees at its factory and cooling unit 
F procured from the local factory amounts to manufacturing of the air-
conditioner, a new article, classifiable under Tariff Heading 84.15 
of the Central Excise Tariff Act, 1985 for the purpose oflevying of 
excise duty. 
G 
Dismissing the appeals, the Court 
HELD:l.1. There is no substance in the submissions advanced 
on behalf of the assessee that no change in the name, character and 
use of the product or transformation of the raw material into fmished 
product came into existence; the cooling units or condensing units 
H 
7M 
. 
• 
f 
-I 
FEDDERSLLOYDCORPORATIONLTD. v. COMMNROF 785 
CENTRAL EXCISE, MUMBAI 
i ' 
by themselves cannot function as air-conditioners. They have to be A 
joined together with pipe kits, electrical cord and remote control, etc. 
to function as a complete air conditioner unit. This process was 
carried at the factory-cum-god own of the assessee. 
[Para 9] [788-D, E] 
B 
1.2. Clause (f) Section 2 of the Central Excise Act gives an 
inclusive definition of the term "manufacture". According to the 
dictionary, the term "manufacture" means a process which results 
in an alteration or change in the goods which are subjected to the 
process of manufacturing leading to the production of a commercially c 
new article. As to what constitutes manufacture would depend upon 
the facts of each case. In the instant case, condensing units were 
manufactured by the appellant at its factory and the cooling units 
were procured from the local market for which the electrical motors 
~ 
were supplied by the assessee. Neither the condensing unit nor the D 
cooling unit by itself is a complete air conditioner. It is only when 
these two units are put together the complete unit of air conditioner 
fit for use came into existence. Air conditioner is a commercially new 
article than either the condensing unit or the cooling unit. Thus, the 
contention of the assessee that there is no manufacture at their 
Bombay Unit stands belied and cannot be accepted. 
E 
(Paras 11and12] [789-A, B, C, D] 
1.3. Reference to the applicability of the rule 2(a) of the Rules 
of Interpretation is not necessary and the matter can be decided 
t 
without reference to that rule. The issue of clearing complete units F 
of air-conditioners from Bombay Branch of the assessee was evident 
from the depositions of the assessee's own employees and the 
partners ofNew Gold Air-conditioners who had supplied the cooling 
units and the invoice raised by the assessee. Hence, the authorities 
below rightly held that the assessee was indeed manufacturing the 
split air-conditioners. [Paras 13 and 14] [789-D, E, F] 
G 
,, 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 8066-
8068 of 2001. 
From the Final Order No, 242-244/2001-B dated 1.5.2001 passed H 
786 
SUPREME COURT REPORTS 
(2007] 12 S.C.R. 
A by the Customs Excise Gold Control Appellate Tribunal, New Delhi in 
Appeals No. E/761-763/98-B. 
Alok Yadav and Monish Panda (for M.P. Devanath) for the 
Appellant. 
B 
T.V. Ratnam (for B. Krishna Prasad) for the Respondent. 
The Judgment of the Court was delivered by 
BHAN, J. 1. The present appeals under Section 35L(b) of the 
Central Excise Act, 1944 (for short "the Act") have been filed by the 
C assessee against the impugned final Order nos. 242-244/2001-B dated 
1st May, 2001 in appeal Nos. E/761-763/98-B passed by the Customs, 
Excise & Gold (Control) Appellate Tribunal, New Delhi (for short ''the 
Tribunal"), rejecting the appeals filed b

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