Paper processing and printing do not amount to manufacture unless they create a distinct marketable article.

For excise purposes, a process on duty-paid paper amounts to manufacture only if it produces a new, marketable article with a distinct name, character or use. Applying gum to one side of paper in making gummed tapes did not create gummed paper known to the market as such, and printing designs, monograms, labels or descriptions on duty-paid wrapping paper did not turn it into converted type of paper. In both instances, the products remained articles made out of paper and were not exigible under Item 17 of the First Schedule to the Central Excises and Salt Act, 1944.

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Issues: (i) Whether application of gum on one side of duty-paid paper in the course of making gummed tapes brought into existence gummed paper chargeable to excise duty under Item 17 of the First Schedule to the Central Excises and Salt Act, 1944; (ii) Whether printing designs, monograms, labels or descriptions on duty-paid wrapping paper converted it into converted type of paper chargeable under Item 17.

Issue (i): Whether application of gum on one side of duty-paid paper in the course of making gummed tapes brought into existence gummed paper chargeable to excise duty under Item 17 of the First Schedule to the Central Excises and Salt Act, 1944.

Analysis: Excise duty under the charging provision attaches to manufacture of goods known to the market as such. A mere process or intermediate step does not amount to manufacture unless it results in a new and different article having a distinctive name, character or use and capable of being bought and sold as such. The record showed no material from the revenue to establish that the intermediate product made by merely applying gum was known in the trade as gummed paper or that the petitioners' process produced a commercially distinct commodity. The petitioners' description of the fuller process, including flattening and cutting, remained unrebutted by expert or trade evidence.

Conclusion: The intermediate product was not gummed paper known to the market as such and was not exigible to duty as paper under Item 17.

Issue (ii): Whether printing designs, monograms, labels or descriptions on duty-paid wrapping paper converted it into converted type of paper chargeable under Item 17.

Analysis: The Department's own trade notice stated that labels, cartons and similar articles made out of duty-paid paper and printed with designs or monograms were articles of paper outside the tariff item. Mere printing on wrapping paper did not bring about the kind of transformation required to make a new paper product. In the absence of material showing that the printed wrappers were known in the market as converted paper, and in view of the Department's earlier trade notice, the wrappers remained articles made out of paper rather than converted type of paper.

Conclusion: The printed textile wrappers were not converted type of paper and did not fall within Item 17.

Final Conclusion: The petition succeeded, and the excise authorities were restrained from treating the petitioners' products as excisable paper goods under Item 17 in the manner asserted by the Department.

Ratio Decidendi: For excise purposes, a process on paper is not manufacture unless it produces a new, marketable article with a distinct commercial identity; mere application of gum or printing of designs on duty-paid paper does not, by itself, create excisable paper goods.

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