Manufacture under excise law depends on a distinct commercial identity; PPRF yarn was treated as a separate excisable product.

Excise duty applies where processing of duty-paid inputs brings into existence a new commodity with a distinct name, character or use; trade parlance and market understanding are the primary guides for tariff classification. Applying that test, PPRF yarn made by doubling duty-paid polyester spun yarn with duty-paid rayon filament yarn was treated as a commercially distinct product known differently from its component yarns. The classification finding was accepted as a factual determination made on correct legal principles, so the product was held to be separately excisable and the assessee was not entitled to refund.

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Issues: Whether PPRF yarn, produced by doubling duty-paid polyester spun yarn with duty-paid rayon filament yarn, amounted to a new and distinct commodity liable to excise duty under the relevant tariff entry, thereby disentitling the assessee to refund.

Analysis: Excise duty is attracted on manufacture, and manufacture is complete when the processing results in a new commodity having a distinct name, character or use. The controlling test is whether the process brings into existence a commercially separate product known in the market by a distinct identity, and for tariff classification the trade meaning and market understanding are of primary relevance. On the evidence accepted by the Tribunal, PPRF yarn was found to be a new yarn known differently from the component yarns, and the classification finding was one of fact based on proper legal principles.

Conclusion: PPRF yarn was correctly treated as a separate and distinct excisable product, and the assessee was not entitled to refund.

Ratio Decidendi: Where processing of duty-paid inputs results in a commercially distinct product with a separate market identity, the product is manufactured goods liable to excise, and a factual classification finding based on trade parlance will not ordinarily be interfered with in appeal.

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