Manufacture in substance: integrated assembly and finishing of lock parts was held to amount to excise manufacture.

Under Central Excise law, manufacture was determined by whether a new and distinct commercial product emerged with a different name, character or use; mere branding, polishing or making goods marketable was insufficient. On the facts, the assessee supplied or financed essential parts, controlled assembly through artisans or units, paid labour on a piece-rate basis, and retained ownership throughout the process. The finishing work at the assessee's premises was only the last stage of an integrated process by which locks came into existence. The activity was therefore manufacturing in substance, and the assessee was treated as a manufacturer of locks; the Tribunal's contrary view was held unsustainable.

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Issues: Whether the assessee's activities of supplying raw material parts, getting locks assembled through artisans or units, and undertaking polishing, branding, stamping and packing amounted to manufacture of locks under the Central Excise law.

Analysis: Manufacture was tested on the settled principle that a new and distinct commercial product must emerge with a different name, character or use; mere branding, polishing or rendering goods marketable is insufficient. The record showed that the assessee supplied the essential parts or financed their purchase, controlled the assembly process, paid labour charges on piece-rate basis, and retained ownership of the material throughout the manufacturing chain. The finishing operations at the assessee's premises were only the last stage of a continuous and integrated process by which locks came into existence. On those facts, the activity was not a mere trading or post-manufacturing embellishment exercise but a manufacturing process in substance.

Conclusion: The assessee was a manufacturer of locks and the Tribunal was not justified in holding otherwise.

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