Case law
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Supreme Court of India · 5 Aug 2026
Commissioner Of Central Excise… vs M/S Xerox India Ltd. And Ors
Legal principle
The Revenue cannot, upon one and the same set of facts, treat imported goods as complete machines for the purpose of levying Customs duty and CVD and as incomplete articles for invoking Note 6 to Section XVI, and Rule 2(a) of the General Rules for the Interpretation of the Schedule is merely a rule of classification, not a test of manufacture.
Court decision
The Supreme Court dismissed the Revenue's appeals (Civil Appeal Nos. 5939-5941 of 2010 and 11870-11872 of 2018), affirmed the Tribunal's findings as correct and evidence-based, and held that the activity of pinning and plugging different parts together — 'kitting' to make a complete set per the customer's specification — does not fall within the definition of 'manufacture' under Section 2(f) of the C E Act, and that Note 6 to Section XVI of the C E Tariff Act was not attracted.
Facts
M/s Xerox India Ltd. imported photocopier parts, modules and accessories in complete knocked down (CKD) or semi-knocked down (SKD) condition from its sister concerns' warehouses abroad, paying Customs duty and CVD, and at its warehouses at Hyderabad and Rampur grouped, plugged and pinned the modules into complete machines to each customer's specification — an activity it called 'kitting'. Acting on a search of the warehouse and statements of employees under Section 14 of the C E Act, the Revenue issued an SCN dated 04.05.2007 alleging that this warehouse activity amounted to 'manufacture' under Section 2(f) of the Central Excise Act, 1944 read with Note 6 to Section XVI of the Central Excise Tariff Act, 1985. The Revenue demanded Excise duty and ED Cess of Rs. 17,86,47,382 for April 2002 to November 2006, sums under the proviso to Section 11A with Sections 11AB and 11AC, and penalty on two executives under Rule 26 of the Central Excise Rules, 2002. The Commissioner confirmed the demand by Order-in-Original dated 28.03.2008; the CESTAT, South Zonal Bench, Bangalore set it aside; the Revenue appealed to the Supreme Court in two sets of civil appeals.
Key provisions
- Section 2(f), Customs Tariff Act, 1975 — Duties specified in the Schedules to be levied