Packing handmade biris with a machine does not amount to manufacture; lower tariff classification applies and duty demand fails.

Packing handmade biris in pre-printed plastic wrappers with a power-operated machine did not amount to manufacture where the biris themselves were already made by hand and the machine was used only for packing. The show cause notices were limited to misclassification based on the packing activity and did not separately allege manufacture by labelling, re-labelling or repacking under Chapter Note 3 of Chapter 24. Applying the earlier decision on similar biri packing, the product remained classifiable under sub-heading 2403 10 31, not the higher-duty sub-heading 2403 10 39, and the duty demand based on misclassification was unsustainable.

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Issues: Whether packing of handmade biris in pre-printed plastic wrappers with the aid of a power-operated machine rendered the product classifiable under sub-heading 2403 10 39 instead of sub-heading 2403 10 31, and whether the resultant duty demand was sustainable.

Analysis: The dispute turned on the stage at which machine use occurred. The record showed that the biris were handmade and that machine operation was confined to packing them in pre-printed wrappers after the biris had already been manufactured. The scope of the show cause notices was misclassification on account of such packing activity; it did not raise a separate issue of manufacture by reason of labelling, re-labelling or repacking under Chapter Note 3 of Chapter 24 of the Central Excise Tariff Act, 1985. The earlier decision on similar biri packing activity was found applicable, and the use of machine only for packing was held insufficient to shift the product to the higher-duty entry.

Conclusion: Packing alone with the aid of machine did not amount to manufacture for the purpose of classification under sub-heading 2403 10 39. The correct classification remained under sub-heading 2403 10 31, and the duty demand based on misclassification was unsustainable.

Final Conclusion: The assessee succeeded on classification, and the orders confirming duty were set aside.

Ratio Decidendi: Use of power-operated machinery only for packing handmade biris in pre-printed wrappers, without any manufacture of the biris themselves, does not justify classification under the higher-duty tariff entry or amount to manufacture under the excise law.

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