Manufacture requires a new marketable commodity; mere inter-twining of duty-paid yarns did not attract excise duty.

Inter-twining duty-paid cotton yarn and nylon yarn into weft yarn, using only a small number of twists, did not create a new excisable commodity because the process brought no essential change in identity and the product was not shown to be known in trade or market as a distinct article. The Court held that, on these facts, the process did not amount to manufacture under Section 2(f) of the Central Excise Act, so Tariff Item 18E was not attracted. In the absence of evidence supporting the department's contrary view, the demand and adjudication were unsustainable.

---

---

Issues: Whether the inter-twinning of cotton yarn and nylon yarn into weft yarn resulted in manufacture of a new excisable product attracting duty under Tariff Item 18E.

Analysis: The material process showed only the inter-twining of two duty-paid yarns with a small number of twists, without bringing about any essential change in identity. The evidence accepted by the Court showed that the product was not known to trade and was not available in the market as a distinct commodity. On that footing, the process did not amount to manufacture within the meaning of Section 2(f) of the Central Excise Act, and Tariff Item 18E was not attracted. The Court also found no evidentiary basis to support the department's contrary conclusion.

Conclusion: The weft yarn was not a new product and its production did not amount to manufacture; the demand and adjudication were therefore unsustainable, in favour of the assessee.

Final Conclusion: The appellate challenge failed because the disputed product did not acquire a separate commercial identity through the process used, so excise duty could not be levied on it as a manufactured yarn.

Ratio Decidendi: A process amounts to manufacture only if it results in a new, distinct, and marketable commodity with an essential change in identity; mere inter-twining of duty-paid materials without such transformation is not manufacture.

---