JUDGMENT :

S.V.N. BHATTI, J.

1. Revenue is the Appellant. Civil Appeal Nos. 5939-5941 of 2010 arise from the Order dated 09.11.2009 in Central Excise Appeal Nos. E/591, 592 & 596 of 2009 in the CESTAT, South Zonal Bench at Bangalore, and in turn the said appeals were filed questioning the Order-in-Original No. 04/2008-C Ex. Dated 28.03.2008 of the Commissioner of Central Excise, Hyderabad-IV (“O-I-O”).

2. Civil Appeal Nos. 11870-11872 of 2018 are also at the instance of Revenue and are directed against the Order dated 31.07.2017 in Appeal Nos. E/975, 976, and 977 of 2009, which, in turn, is directed against the Order in Original No. 57/COMMR./Meerut-II/2008 dated 28.11.2008, passed by the Commissioner of Central Excise, Meerut-II.

3. M/s Xerox India Ltd. Is the first Respondent in both sets of Appeals. Respondent Nos. 2 and 3 held executive positions with the first Respondent. The circumstances and the point for determination in both sets of Appeals are similar, and hence are considered and disposed of by this common Judgment. The circumstances in Civil Appeal Nos. 5939-5941 of 2010 are referred to for the purpose of factual narration and are sufficient for disposing of Civil Appeal Nos. 11870-11872 of 2018. The parties are referred to as Revenue and Assessee.

4. The point for determination in both sets of Appeals is whether the activity undertaken by the Assessee at its warehouse, the grouping and, to whatever extent, the fitting together of imported modules into Xerox Photocopier machines to meet a customer’s need, amounts to “manufacture” within the meaning of Section 2(f) of the Central Excise Act, 1944 (“C E Act”), read with Note 6 to Section XVI of the First Schedule to the Central Excise Tariff Act, 1985 (“C E Tariff Act”).

CIVIL APPEAL NOS. 5939-5941 OF 2010

5. The Assessee is engaged in the business of photocopiers, toners and photoreceptors. It also trades digital multi-functional printers, copiers and photocopiers-cum-printers, which fall under Tariff sub-head 8471.00. The Assessee has a warehouse at Hyderabad, State of Telangana, within the territorial jurisdiction of the Appellant, and another hub/warehouse in Rampur, State of Uttar Pradesh.

6. The Assessee, by paying Customs and Countervailing Duty (“CVD”), imports parts, modules, and accessories of the said machines in complete knocked down (“CKD”) or semi-knocked down (“SKD”) condition from the warehouses of the Assessee’s sister concern. In the Appeals, the dispute between the Revenue and the Assessee relates to the period between April, 2002 and November, 2006. On 04.05.2007, the Appellant/Revenue issued a Show Cause Notice (“SCN”) to the Assessee. The SCN was issued on the ground that the Assessee’s activity at the subject warehouse amounts to manufacturing within the meaning of Section 2(f) of the C E Act. The SCN is premised on the following circumstances:

6.1 Xerox India Limited manufactures digital multi-function printers (tariff heading 8471.00), photocopiers (9009.00), toners (3707.00) and photoreceptors. The SCN rests on documents seized during the search of the Assessee’s warehouse and on statements of its employees recorded under Section 14 of the C E Act.

6.2 The First Respondent imports parts and modules in CKD or SKD condition from Xerox Group warehouses located abroad and buys some components in India, assembling and configuring them to each customer’s specification. This line of functioning, according to the Revenue, amounts to manufacture within Section 2(f) of the C E Act. The purchase orders show every machine built up from different modules in different configurations. The statement of the General Manager (Planning and Technical Support) is referred to and relied upon. Further, the Deputy General Manager (Import) and the Head (Technical Support) admitted that the modules are not functional, and most cannot work independently until assembled. The customers’ needs establish that what is imported is not a complete machine, but distinguishable parts an