Captive manufacturing of aluminium goods does not create separate excise liability for intermediate circles in the production process.

Aluminium circles emerging during the captive manufacture of topes were treated as an intermediate stage of an integrated manufacturing process, not as a separately marketable product liable to excise duty under Tariff Item 27(b). Because the circles did not leave the factory or enter trade as distinct goods, the process was not regarded as creating a separate taxable manufacture for excise purposes. The cited Supreme Court authority was distinguished on that basis. On that reasoning, the petitioners were also relieved from following the Rule 56-A procedure under the Central Excise Rules.

---

---

Issues: Whether aluminium circles emerging during the captive manufacture of topes were independently liable to excise duty under Tariff Item 27(b), and whether the petitioners were required to follow the procedure under Rule 56-A of the Central Excise Rules.

Analysis: The process undertaken by the petitioners began with cutting duty-paid aluminium sheets into shapes, continued through further shaping and spinning, and culminated in the manufacture of topes. The circles did not leave the factory and were not marketed as such. On these facts, the intermediate emergence of circles did not amount to a separately taxable manufacture for excise purposes, because the relevant manufacture was the integrated process resulting in the final product. The cited Supreme Court authority was distinguished as not supporting duty on intermediate products in such a captive manufacturing process.

Conclusion: Aluminium circles formed only as an intermediate stage in the captive manufacture of topes were not separately chargeable to duty under Tariff Item 27(b), and the petitioners were entitled to relief from the Rule 56-A procedure.

---