Mere cutting of printed sheets does not amount to manufacture when no new commercially distinct product emerges.

Mere guillotining of printed sheets into required label sizes at the Munger unit did not amount to manufacture for central excise purposes. The activity was limited to cutting larger printed sheets received from another unit, with no further printing or processing at that location, and the goods continued to remain labels rather than a new commercially distinct product. As the record showed that any further conversion into packing material occurred only at the Nepal unit, classification under sub-heading 4821.00 was sustained and the duty demand based on sub-heading 4823.90 was held unsustainable.

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Issues: Whether cutting printed labels to required size at the Munger unit amounted to manufacture and justified classification under sub-heading 4823.90 instead of sub-heading 4821.00, and consequent duty demand.

Analysis: The activity at the Munger unit was limited to guillotining or cutting larger printed sheets received from another unit into the required label size. No further printing or processing was undertaken there. The goods continued to answer the description of labels, and the record showed that further conversion into packing material took place only at the Nepal unit. Mere cutting of larger sheets into convenient sizes does not, by itself, bring into existence a new commercial commodity with a distinct name, character, or use. On the facts found, the Revenue had not established that manufacture occurred at the Munger unit.

Conclusion: The process at the Munger unit did not amount to manufacture, the goods remained classifiable under sub-heading 4821.00, and the duty demand based on classification under sub-heading 4823.90 was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Mere cutting of printed sheets into required sizes, without emergence of a new commercially distinct product, does not constitute manufacture for central excise purposes.

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