Manufacture test for electroplating job work: no new product emerged, so Central Excise duty and penalty failed.

Electroplating of duty-paid plastic mouldings on a job-work basis was held not to amount to manufacture because the process did not create a new product with a distinct name, character or use. Applying the settled test of manufacture, the Tribunal found that no commercially different product emerged from the plastic components after electroplating, so the activity remained a job-work process rather than excisable manufacture. As no manufacture was established, the demand of Central Excise duty and the accompanying penalty could not survive, and the issue was decided in favour of the assessee.

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Issues: Whether electroplating of duty-paid plastic mouldings undertaken on job work basis amounts to manufacture so as to attract Central Excise duty on the value of the plastic components.

Analysis: The Tribunal held that the process of electroplating did not bring into existence any new product having a distinct name, character or use. Applying the settled test of manufacture, which requires emergence of a commercially different product from the one on which the process was carried out, it found that the activity remained a job work process and did not amount to manufacture. On that basis, the demand of duty and penalty could not survive.

Conclusion: The issue was decided in favour of the assessee and against the demand of duty and penalty.

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