Non-manufacture of metallising, lacquering and laminating polyester film defeated duty demand, interest and penalty.

Metallising, lacquering and laminating duty-paid polyester film do not amount to manufacture, as earlier decisions had already held the process to be non-manufacturing. Once the activity is outside the scope of manufacture, the foundation for duty demand falls away and interest and penalty cannot survive. Filing a classification list or paying duty under protest does not create liability where none exists in law. Decisions relied upon to support the contrary view were distinguished as not constituting a final binding determination on the same issue. The duty demand, interest and penalty were therefore unsustainable.

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Issues: Whether metallising, lacquering and laminating duty-paid polyester film amounts to manufacture, and consequently whether duty demand, interest and penalty could survive.

Analysis: The process was held to be covered by earlier decisions which had already concluded that metallising/lacquering/laminating of polyester film does not amount to manufacture. Once the activity itself is not manufacture, the basis for duty demand disappears. The fact that a classification list may have been filed or duty paid under protest does not create a liability where none exists in law. The contrary decisions relied upon were distinguished as not constituting a final binding determination on the same issue.

Conclusion: The process does not amount to manufacture and the duty demand, interest and penalty were unsustainable.

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