Manufacture by processing: essential finishing of brake lining blanks made them excisable goods and attracted licensing and duty.

Drilling, trimming and chamferring of duty-paid brake lining blanks were treated as manufacture because the unfinished blanks were not fit for direct vehicle use and the processes were essential to complete them for their intended marketable form. Applying the excise principle that manufacture includes processes incidental or ancillary to completion and results in a commercially distinct article with separate utility, the processed goods were held to become usable brake linings sold under the appellants' trade name. The consequence was liability to obtain a licence and pay excise duty, including differential duty, on the processed linings.

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Issues: Whether drilling, trimming and chamferring of duty-paid brake lining blanks amounted to manufacture under section 2(f) of the Central Excises and Salt Act, 1944, and whether the appellants were therefore liable to obtain a licence and pay excise duty on the finished kit linings.

Analysis: The goods received by the appellants were incomplete brake lining blanks, not finished articles capable of direct use in vehicles. The processes of drilling, trimming and chamferring were not merely cosmetic or incidental in a loose sense; they were essential to render the blanks fit for their intended vehicle-specific use and for marketing them as kit linings under the appellants' trade name. On the settled excise principle that manufacture includes every process incidental or ancillary to the completion of a manufactured product, and that a process is manufacture where it results in a commercially distinct article with its own utility, the relevant question was whether the processing completed the product for marketable use. On the facts, the processing altered the commodity so that the brake lining blanks became usable brake linings fit for sale in the form in which the appellants marketed them.

Conclusion: The process amounted to manufacture within section 2(f), and the appellants were liable to take out a licence and pay excise duty, including differential duty, on the processed brake linings.

Final Conclusion: The appeal failed because the processed brake lining blanks were held to be manufactured goods within the meaning of the excise law, attracting licensing requirements and duty.

Ratio Decidendi: Where pre-existing goods are subjected to processes that are essential to complete them for their intended marketable use and produce a commercially distinct article, those processes constitute manufacture and attract excise duty.

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