Court rules in favor of Company, finding no manufacturing in raw material conversion. Show cause notice quashed.

The Court ruled in favor of the petitioner, a registered Company, in a challenge against a show cause notice proposing Cenvat duty on converting raw materials into finished goods. Citing a Supreme Court decision, the Court held that the activities did not amount to manufacturing as they did not alter the material's characteristics or end-use. The Court dismissed the allegation that the petitioner's activities constituted manufacture and quashed the show cause notice for demanding Central Excise duty. The writ petition was allowed without costs.

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Issues:
Challenge to show cause notice proposing levy of Cenvat duty on conversion of raw materials into finished goods.

Analysis:
The petitioner, a registered Company under the Companies Act and TNVAT Act, challenged a show cause notice proposing Cenvat duty on converting raw materials into finished goods. The case was compared to a Supreme Court decision involving cutting/slitting of tissue paper jumbo rolls. The Supreme Court held that such activities did not amount to manufacture as they did not change the characteristics or end-use of the material. The Court emphasized that the mere mention of a product in a tariff heading does not imply manufacturing. The process of cutting/splitting jumbo rolls of tissue paper did not constitute manufacture. The Court remitted the matter to ascertain if the petitioner was manufacturing wet and fragranced tissues.

The respondent alleged that the petitioner converted tissue/napkin rolls into various finished products. The process mirrored the one in the Supreme Court case of S.R. Tissues Pvt. Ltd. The Court, following the Supreme Court's decision in the mentioned case, concluded that the petitioner's activities did not amount to manufacture. Therefore, the show cause notice for demanding Central Excise duty was deemed baseless and quashed. The writ petition was allowed, and no costs were imposed.

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