Supreme Court Defines 'Manufacture' for Excise Duty on Polyethelene Boards

The Supreme Court held that the process of manufacturing polyethelene sandwich board constituted 'manufacture' under the Central Excises and Salt Act, 1944. The court rejected the petitioner's claim for exemption from excise duty based on notifications, stating that the product was liable to be assessed under the relevant tariff. The judgment emphasized the definition of 'manufacture' as creating a new commodity with distinct characteristics and clarified that any process incidental to completing a manufactured product falls under 'manufacture'. The court ruled against the petitioner, affirming the liability to pay excise duty on the polyethelene sandwich board.

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Issues:
1. Whether the process of manufacturing polyethelene sandwich board falls within the definition of 'manufacture' under Section 2(f) of the Central Excises and Salt Act, 1944.
2. Whether the notifications cited by the petitioner exempt the product from excise duty.

Analysis:
1. The petitioner sought relief from the court to prevent the levy of excise duty on polyethelene sandwich board manufactured using board, paper, and polyethelene granules. The petitioner argued that the process did not constitute 'manufacture' under Section 2(f) of the Act. The court referred to previous judgments, including one by Padmanabhan, J., and emphasized the Supreme Court's ruling in Empire Industries Ltd. v. Union of India. The Supreme Court held that 'manufacture' occurs when a new commodity with distinct characteristics is created. The court reiterated that any process incidental to the completion of a manufactured product falls under 'manufacture'. The court concluded that the process of bonding paper and board with polyethelene, as described by the petitioner, indeed constituted 'manufacture' under the Act.

2. The petitioner relied on notifications to argue for exemption from excise duty. However, the court noted that the notifications merely specified the limit of exemption and did not exclude the product from being assessed under Tariff No. 17(2) of the Excise Tariff. The court found that the polyethelene sandwich board, after undergoing the manufacturing process described, became a marketable product and thus was liable to be assessed under the relevant tariff. Consequently, the court dismissed the Writ Petition, ruling against the petitioner's claim for exemption from excise duty.

In conclusion, the court held that the process of manufacturing polyethelene sandwich board constituted 'manufacture' under the Act and rejected the petitioner's claim for exemption from excise duty based on the notifications cited. The judgment emphasized the definition of 'manufacture' as per the Act and the criteria for determining the liability to pay duty.

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