Job work exemption and seal stamping on finished goods: conversion counted as manufacture, but mere identification stamping did not.

Notification No. 119 of 1975 applied to diamond jewellery made on job work where crude diamonds were supplied, converted into distinct commercial articles, and returned for labour charges only; the petitioner was therefore liable only on job work charges. Affixing the petitioner's seal on already manufactured jewellery and silverware was merely identification and commercial branding, not a process incidental or ancillary to manufacture under section 2(f) of the Central Excises and Salt Act, 1944; excise duty was not leviable on those items. The writ petition succeeded and the excise orders were quashed.

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Issues: (i) whether the petitioner was entitled to the benefit of Notification No. 119 of 1975 in respect of diamond jewellery manufactured on job work basis for another firm, and (ii) whether affixing the petitioner's seal on purchased jewellery and silverware amounted to manufacture attracting excise duty.

Issue (i): whether the petitioner was entitled to the benefit of Notification No. 119 of 1975 in respect of diamond jewellery manufactured on job work basis for another firm.

Analysis: The notification applied where goods falling under Item 68 were manufactured in a factory as job work, meaning that the article had to be supplied to the job worker, undergo a manufacturing process, be returned to the supplier, and be charged for only the job work done. The evidence showed that crude diamonds were supplied and were cut, set in gold, and converted into separate commercial articles of diamond jewellery. The two partnership firms were held to be distinct entities, and on the facts the petitioner was treated as having received the materials for conversion and returning the finished jewellery for labour charges only.

Conclusion: The petitioner was entitled to the benefit of Notification No. 119 of 1975 and was liable only on the job work charges in respect of the diamond jewellery.

Issue (ii): whether affixing the petitioner's seal on purchased jewellery and silverware amounted to manufacture attracting excise duty.

Analysis: Section 2(f) of the Central Excises and Salt Act, 1944 includes processes incidental or ancillary to the completion of a manufactured product, but the articles received by the petitioner were already fully manufactured. Stamping them with the petitioner's seal was only for identification and to enhance commercial value, and was not a process completing manufacture or altering the goods into a new manufactured product.

Conclusion: Affixing the seal did not amount to manufacture, and excise duty was not leviable on those purchased jewellery and silverware items.

Final Conclusion: The writ petition succeeded and the excise orders were quashed, with the petitioner obtaining relief on both disputed heads of duty.

Ratio Decidendi: A process amounts to manufacture only if it brings the goods through a genuine manufacturing transformation or is incidental or ancillary to completion of the manufactured product; mere identification stamping on already manufactured goods is not manufacture, and material supplied for conversion into a distinct commercial article falls within job work when only labour charges are recovered.

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