Manufacture for excise requires a new commercially distinct product; deeming amendments cannot expand constitutional legislative competence.

A process is treated as manufacture for excise only if it creates a new commercially distinct product or is truly incidental or ancillary to completion of manufacture. Mere lacquering or printing of plain aluminium containers, done after manufacture for salability, does not satisfy that test. Parliament cannot, by deeming fiction in tariff amendments, convert a non-manufacturing process into manufacture where no commercial transformation exists, because excise competence under Entry 84 extends only to goods manufactured or produced in India. The impugned amendments and tariff provisions were therefore held ultra vires for want of legislative competence, with consequential relief.

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Issues: Whether the amendments deeming lacquering or printing of plain aluminium containers to be "manufacture", and the corresponding tariff entries, were within Parliament's legislative competence under Entry 84 of List I of the Seventh Schedule to the Constitution of India.

Analysis: The governing test for manufacture is that the process must bring into existence a new and commercially distinct article; a mere post-manufacturing operation undertaken for salability does not satisfy that test. Prior decisions had already held that printing and lacquering of plain extruded aluminium tubes were not incidental or ancillary to manufacture and did not themselves amount to manufacture. The impugned amendments under the Finance (No. 2) Act, 1980 and the corresponding Chapter Note and tariff item in the Central Excise Tariff Act, 1985 merely declared such processes to be manufacture without showing any commercial transformation of the goods. Since excise power under Entry 84 is confined to duties on goods manufactured or produced in India, Parliament could not, by legislative fiat, bring a non-manufacturing process within that entry. The residuary entry was not accepted as a basis to sustain the levy in the absence of a valid finding that the process fell outside Entry 84 but within Entry 97.

Conclusion: The impugned amendments and the corresponding tariff provisions were held ultra vires Entry 84 of List I of the Seventh Schedule to the Constitution of India and void for want of legislative competence, in favour of the assessee.

Final Conclusion: The petition succeeded, the challenged excise provisions were struck down, and consequential relief including refund was granted.

Ratio Decidendi: A process can be treated as manufacture for excise purposes only if it results in a new commercially distinct product or is truly incidental or ancillary to completion of manufacture; a statutory declaration cannot enlarge Parliament's competence beyond the constitutional entry authorising excise on manufactured goods.

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