Printing and lacquering of extruded aluminium tubes and licence requirement denied; activity held outside manufacture, relief granted.

Whether printing and lacquering of extruded aluminium tubes constitutes "manufacture" for licence purposes was analysed by applying the definition of manufacture and the ancillary/incidental process concept; because unprinted and unlacquered tubes are marketable and printing/lacquering are not integral to completion of the manufactured product, those processes are independent and do not create a new substance, so they fall outside the definition of manufacture. Consequently the impugned licence requirement and related orders were void as ultra vires and were quashed, with directives preventing enforcement against the petitioner.

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Issues: (i) Whether printing and lacquering of plain duty-paid extruded aluminium tubes and pipes amounts to "manufacture" under the Central Excises and Salt Act, 1944 and consequently attracts liability to obtain a licence under Section 6 and payment of excise duty under Item 27(e) of the First Schedule.

Analysis: Section 3(1) levies duty on "excisable goods" as defined in Section 2(d) by reference to the First Schedule; Item 27(e) specifies "Extruded shapes and sections including extruded pipes and tubes." The definition of "manufacture" in Section 2(f) includes processes incidental or ancillary to completion of a manufactured product. Application of the authorities' tests requires a transformation that brings a new and different article having a distinctive name, character or use. Printing and lacquering applied to plain extruded tubes purchased from the market do not involve the extrusion process (formation of tube from metal slug) nor do they effect a transformation producing a new substance with distinctive name, character or use. Plain unprinted and unlacquered extruded tubes are marketable commodities; printing and lacquering merely enhance salability and do not relate to completion of manufacture. Where the legislature intended to cover all forms it used expansive language (for example "in any form or size"); Item 27 lacks such language. Administrative imposition of licence/duty in these circumstances would amount to taxing sale rather than manufacture.

Conclusion: Printing and lacquering of plain duty-paid extruded aluminium tubes and pipes do not constitute "manufacture" within the meaning of Section 2(f) and do not attract excise duty under Item 27(e); therefore the requirement to obtain a licence under Section 6 and the impugned notice and order are void.

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