Brand labelling on biris constitutes manufacture, while exemption for unbranded biris was upheld as a valid tax condition.

Affixing a brand label on biris, or on the wrapper enclosing bundled biris, was treated as manufacture because manufactured tobacco included labelling of containers and the wrapper was regarded as a container; the levy therefore applied. The restriction in the exemption notifications to unbranded biris was upheld as a valid condition attached to tax exemption, not an unconstitutional classification under Article 14, because the Government could limit relief on germane terms. The writ petitions challenging the levy and refund claim therefore failed.

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Issues: (i) Whether affixing a brand label on biris or on the wrapper containing bundled biris amounted to manufacture attracting excise duty; (ii) whether the provisos to the exemption notifications restricting relief to unbranded biris were unconstitutional under Article 14.

Issue (i): Whether affixing a brand label on biris or on the wrapper containing bundled biris amounted to manufacture attracting excise duty.

Analysis: Biris fell within manufactured tobacco, and the special definition of manufacture in relation to tobacco included labelling of containers. The wrapper or leaf enclosing the biris was treated as a container for this purpose. On that basis, affixing labels on the biris or their wrapper brought the activity within the statutory concept of manufacture.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the provisos to the exemption notifications restricting relief to unbranded biris were unconstitutional under Article 14.

Analysis: The notifications were issued under the power to grant exemption subject to conditions. The restriction to unbranded biris was treated as a valid condition attached to exemption and not as an impermissible hostile classification. The Court accepted that the Government had wide discretion in structuring tax exemptions, so long as the condition was germane to the subject of exemption.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The writ petitions challenging the levy and seeking refund failed, as both the manufacturing contention and the constitutional challenge to the exemption conditions were rejected.

Ratio Decidendi: In relation to manufactured tobacco, labelling of a container, including a wrapper treated as a container, constitutes manufacture, and an exemption notification may validly restrict relief by imposing conditions such as sale without a brand name.

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