New Delhi, September 19: In a ruling that could impact companies dealing in modular power units, the Supreme Court today dismissed Quippo Energy Ltd.’s appeal against a central excise demand. The bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan held that Quippo’s practice of placing imported gas generator sets (gensets) into steel containers fitted with multiple components creates a distinct marketable product-thereby attracting excise duty.
Background
Quippo imports fully functional gas gensets and leases them to industrial clients. To make relocation easier, the firm mounts each genset inside a steel container and adds items such as radiators, ventilation fans, oil tanks, pumps, silencers, and control panels.
The Ahmedabad Central Excise department argued this assembly amounts to “manufacture” under the Central Excise Act, 1944, because it results in a different commercial product, termed a “Power Pack.” Earlier, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) agreed partly-dropping penalties but upholding excise duty for the normal period.
Court’s Observations
The Supreme Court analysed decades of excise jurisprudence on what constitutes “manufacture.” Justice Pardiwala noted, “Something more than mere processing is required; there must be transformation so that a new and different article emerges having a distinct name, character or use.”
The bench rejected Quippo’s claim that the gensets remained the same product. “The imported genset and the Power Pack are two different commodities with distinct structure and functional utility,” the judgment stated.
Key to the finding was the court’s view that added components like radiators and ventilation systems were not optional accessories but “parts” essential for the containerised unit to work. The judges stressed that portability-the ability to move and operate the unit as a single containerised power plant—gave the final product “an identity of its own in the market.”
Decision
Concluding that both the “transformation” and “marketability” tests were satisfied, the court ruled that Quippo’s containerised gensets qualify as “manufactured goods” under Section 2(f) of the Central Excise Act.
“The process brings into existence a new, distinct and marketable commodity,” the bench ordered, dismissing Quippo’s appeals and affirming the excise duty demand for the standard limitation period.
Case Title: Quippo Energy Ltd. vs. Commissioner of Central Excise, Ahmedabad–II
Decision Date: 19 September 2025
Citation: 2025 INSC 1130