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5. Accordingly, during the period from April 2002 to November 2006, the appellants imported various parts/modules/accessories of Digital Multi Functional Printers, Copiers and Photo Copiers-cum Printers depending upon the purchase orders received from customers. The same were imported either in one consignment or in split packings comprising of various parts/modules/accessories and also procured some indigenously manufactured components. The same were stored in the approved warehouse at Rampur, where kitting activities were undertaken and such activities included assembling of all the components with the use of not only the imported parts/modules but also the indigenous components and accessories including pin-top, software, RAM, Stabilizers etc, as per the requirement and configuration given by the customers. On completion of kitting activities, the goods were dispatched to the customers site, where they were installed. The kitting activity was an essential function to make the machine operational, and the modules and parts were not of the nature which could render the function independently which a complete machine could perform on being assembled with necessary modules and parts.

62. The records undoubtedly establish that the appellants were importers and traders in certain machines including Multi functional printers, Copiers and Photocopiers-cum-printers etc. They were engaged in importation of different modules/ parts of such machines from various manufacturing units of the appellants in various countries. Some of the machines imported as such were sold in the same form whereas others were modified to suite to the requirements of the customers and in some cases even parts and accessories were sold. The main dispute relates to the activity in respect of the machines imported as per the requirement of the customers. While it is the case of the department that such supply is made after necessary manufacturing process as per the need and requirement of the customers, whereas it is the defence of the appellants that there was merely an assembly of module/ parts of the machines done by the appellants, and that too, at the site of installation as supply was in modules or parts. The assembling process described as kitting, involved configuration of the parts of the product as per the requirement of the customers and the same resulted in manufacture thereof.