Pipe coating does not amount to manufacture when the pipes retain identity and no new excisable commodity emerges.

Coating customer-supplied bare M.S. pipes with polyethylene, coal tar, internal epoxy, concrete or fusion bonded epoxy coating did not amount to manufacture because the pipes retained their identity and no new excisable commodity emerged. The applicable principle was that coating, fixing, rubberizing or painting of pipes, by itself, does not create a distinct marketable product when tariff treatment does not materially distinguish coated from uncoated pipes. The Board circular treating similar pipe coating activity as non-manufacture was also binding on revenue authorities, reinforcing the conclusion that no excise duty arose on the activity.

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Issues: Whether the coating processes applied to customer-supplied bare M.S. pipes amounted to manufacture so as to create a new excisable commodity liable to duty.

Analysis: The coating activities, including polyethylene coating, coal tar coating, internal epoxy coating, concrete coating and fusion bonded epoxy coating, were examined in the light of the Board circular and the Supreme Court ruling relied upon by the appellants. The governing principle applied was that coating, fixing, rubberizing or painting of pipes does not by itself bring into existence a new commodity when the pipes retain their identity, and the tariff headings for coated and uncoated pipes do not draw a material distinction. The Board circular also treated similar coating activity on pipes as not amounting to manufacture, and such circulars were binding on the revenue authorities.

Conclusion: The coating process did not amount to manufacture and no new excisable commodity came into existence.

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