Supreme Court Holds "Kitting" of Photocopier Modules Does Not Amount to Manufacture Under Excise Law

Case Snapshot

Case Name: Commissioner of Central Excise v. M/s Xerox India Ltd. & Ors.

Citation: 2026 INSC 805

Bench: Justice S.V.N. Bhatti and Justice N.V. Anjaria

Date of Judgment: August 5, 2026

Area of Law: Central Excise, Manufacture, Customs Duty, Tax Law

The Judgment in One Line

Grouping imported photocopier modules into sets per customer specifications ("kitting") without physical assembly does not constitute "manufacture" under Section 2(f) of the Central Excise Act.

Why This Judgment Matters

This judgment clarifies the fine line between "manufacture" and mere "processing" or "kitting" under excise law. The Court held that no excise duty is attracted when imported modules, already classified and assessed as complete machines, are merely grouped, plugged, and pinned to meet customer specifications without any physical transformation. The judgment reinforces the established test: manufacture requires a new and distinct commercial commodity to emerge. It also emphasizes that the Revenue must prove its case with evidence, not merely by assertion, and that conclusions drawn without inspecting the premises are vulnerable. The decision protects businesses from excise demands on activities that are purely logistical rather than transformative.

Background

Xerox India Ltd. imported photocopier parts and modules in completely knocked down (CKD) or semi-knocked down (SKD) condition from its sister concerns abroad. The goods were classified and assessed as complete machines under Customs Tariff Heading 8471 and paid customs duty and countervailing duty (CVD). At its warehouse in Hyderabad, the assessee grouped the imported modules into sets matching customer orders, assigned unique identification numbers, and cleared them. This process was described as "kitting"—grouping parts for packaging

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