Mere printing on duty-paid paper is not manufacture where the product retains its identity and no new commodity emerges.

Mere printing on duty-paid base paper does not amount to manufacture unless it brings into existence a new commodity with a distinct name, character or use. On the facts, the printed paper retained its identity as paper, so excise duty was not attracted on a manufacture theory. In the alternative, the tariff analysis treated printed paper, if regarded as manufactured, as falling under Chapter 49 with nil duty. The demand was therefore unsustainable on both manufacture and classification grounds, and the appeal succeeded.

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Issues: (i) Whether printing on duty-paid base paper, without bringing into existence a new product with a distinct name, character or use, amounts to manufacture and attracts duty under the excise law; (ii) if duty is otherwise attracted, whether the printed base paper is classifiable under Chapter 49 and liable to nil rate of duty.

Issue (i): Whether printing on duty-paid base paper, without bringing into existence a new product with a distinct name, character or use, amounts to manufacture and attracts duty under the excise law.

Analysis: The process undertaken was only printing on already manufactured paper received from principals. The identity of the article remained paper, and the printing did not transform it into a different commodity. Applying the settled test of manufacture, a mere process is not enough unless it results in a new and distinct product with a different name, character or use. On the facts, the printed paper continued to retain its character as paper.

Conclusion: The printing activity did not amount to manufacture, and no duty was payable on that basis.

Issue (ii): If duty is otherwise attracted, whether the printed base paper is classifiable under Chapter 49 and liable to nil rate of duty.

Analysis: The tariff scheme and Chapter Note 2 to Chapter 49 indicate that printed paper, if treated as manufactured, falls within Chapter 49 rather than the heading proposed by the department. The printed base paper was therefore not chargeable to duty on the department's classification theory as well.

Conclusion: The product was classifiable under Chapter 49 and would attract nil duty.

Final Conclusion: The demand was unsustainable on both the manufacture and classification theories, and the appeal succeeded.

Ratio Decidendi: Mere printing on duty-paid paper does not amount to manufacture unless it brings into existence a new commodity with a distinct name, character or use; alternatively, printed paper falling within Chapter 49 is not dutiable on the classification adopted here.

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