Manufacture test under central excise: veneer job work from timber logs was not a new commodity, so exemption and refund applied.

Processing timber logs into veneer on a job-work basis is not manufacture for central excise unless a new and distinct commodity with a different name, character and use emerges. On that test, the veneer activity fell outside Section 2(f) of the Central Excise Act, so Notification No. 119/75-C.E. was available and the duty levy was unsustainable. Where entitlement on merits was established in writ proceedings, the availability of an alternative remedy did not bar relief, and duty collected during the dispute was liable to be refunded.

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Issues: Whether the petitioner's activity of peeling veneer from timber logs supplied by the customer was manufacture for central excise purposes, and whether the petitioner was entitled to exemption under Notification No. 119/75-C.E. with consequential refund and relief despite the availability of an alternative remedy.

Analysis: The Court applied the settled test of manufacture, namely that a new and distinct article with a different name, character and use must emerge. On the facts, the petitioner's processing of logs into veneer on job-work basis did not amount to manufacture within Section 2(f) of the Central Excise Act. The activity was treated as job work, and the benefit of Notification No. 119/75-C.E. was held to be available. The Court also held that once the claim on merits was established in the writ proceeding, the petitioner could not be driven to another forum on the ground of alternative remedy, and duty collected during the pendency of the matter was liable to be returned.

Conclusion: The petitioner succeeded; the levy was held unsustainable, exemption was allowed, and refund of the duty collected was directed.

Ratio Decidendi: An activity does not amount to manufacture unless it results in a new commodity with a distinct name, character and use, and where exemption is otherwise established on merits, the existence of an alternative remedy does not bar writ relief including refund of illegally collected duty.

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