Manufacture of marble tiles confirmed where processing creates a commercially distinct excisable product; confiscation upheld only for excisable goods.

Cutting and processing marble blocks into slabs did not amount to manufacture because slabs were not treated as new commercially distinct excisable goods, but the conversion of marble blocks into polished or dimensioned marble tiles did amount to manufacture since the tiles emerged as commercially distinct marketable goods. Confiscation and penalty under the excise rules could be sustained only for excisable goods, so they were not valid for the marble slabs. They were upheld for the marble tiles, with the redemption fine and penalty modified in light of the partial relief.

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Issues: (i) Whether cutting and processing marble blocks into marble slabs and polished or unpolished marble tiles amounted to manufacture and resulted in excisable goods; (ii) Whether the seized marble slabs and marble tiles were liable to confiscation and penalty under the excise rules.

Issue (i): Whether cutting and processing marble blocks into marble slabs and polished or unpolished marble tiles amounted to manufacture and resulted in excisable goods.

Analysis: Manufacture under section 2(f) of the Central Excise Act is attracted only when the process brings into existence a new and commercially distinct article known to the market. The earlier ruling on mere cutting of marble blocks into slabs was treated as applicable to slabs, but not to the later stage of processing that produces polished and dimensioned marble tiles. The process of converting marble blocks into marble tiles involves multiple stages of sorting, sawing, reinforcement, polishing and sizing, and the finished tiles emerge as commercially distinct goods.

Conclusion: The marble slabs were not treated as excisable goods, but the marble tiles were treated as goods brought into existence by manufacture and therefore excisable.

Issue (ii): Whether the seized marble slabs and marble tiles were liable to confiscation and penalty under the excise rules.

Analysis: Rule 25 authorises confiscation only of excisable goods. Since the marble slabs were not excisable, confiscation could not be sustained for that item. The marble tiles, however, were found to be excisable goods and had not been accounted for in the statutory records, bringing them within the scope of confiscation and consequential penalty. The redemption fine and penalty were adjusted in view of the partial success of the appeal.

Conclusion: Confiscation and penalty were set aside for the marble slabs and sustained for the marble tiles, with modification of the redemption fine and penalty.

Final Conclusion: The appeal succeeded only in part: relief was retained for the marble slabs, while the confiscation of marble tiles and the related penal consequences were restored with reduced monetary liability.

Ratio Decidendi: A process amounts to manufacture only when it yields a new commercially distinct marketable article, and confiscation under the excise rules can be sustained only in respect of goods that are excisable goods.

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