Court rules cutting and packing tubing for surgery does not create new product. Excise duty not applicable.

The court ruled in favor of the respondent, holding that the process of cutting tubing and packing it for heart surgery did not result in the creation of a new product known as "custom pack." The court determined that since no new commercially different commodity emerged from the process, excise duty could not be imposed. The decision was based on the definition of "manufacture" as the production of a commercially new article resulting from an alteration or change in the facts, as established in a Supreme Court case referenced by the appellant.

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Issues:
Excisability of the product "custom pack" - Whether the process amounts to manufacture or not.

Analysis:
The dispute in this case revolved around the excisability of the product "custom pack." The appellant contended that the activities undertaken by the respondent resulted in the emergence of a new manufactured product attracting excise duty. The appellant relied on documents showing the manufacturing flow chart of the customs pack, claiming that the respondent had previously declared the customs pack as a manufacturing activity. On the other hand, the respondent argued that they were only manufacturers of Heart Valve and ECG electrodes, not of the customs pack. The Commissioner of Central Excise & Customs held that the process amounted to manufacture, leading to the creation of a new product known as "custom pack," thus attracting excise duty and penalty.

The Tribunal, however, had differing opinions on the matter. The Judicial Member agreed with the Commissioner, stating that the product constituted a new commercially different commodity, while the Technical Member believed it was merely packing goods and did not result in a new product. As a result of this disagreement, the matter was referred to a Third Member, who concluded that the process of cutting tubing and packing it for heart surgery did not result in the creation of a new product. The Third Member's decision was based on the absence of a new commercially different commodity emerging from the process, aligning with the Technical Member's view.

The appellant challenged the Tribunal's decision, citing a Supreme Court case that defined "manufacture" as the production of a commercially new article resulting from an alteration or change in the facts. The Tribunal's finding that no new product was manufactured by the respondent led the court to dismiss the appeal, ruling in favor of the assessee. The court held that since only packaging of the goods was being done, and no new product emerged, excise duty could not be levied.

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