Essential packing material can form part of manufacture for excise purposes and qualify for exemption when it makes goods marketable.

Wrapping paper used to pack or wrap paper reams/reels was treated as part of the manufacture of marketable goods because wrapping was essential to sale and marketability. The settled excise principle applied was that manufacture includes processes incidental or ancillary to bringing goods into marketable condition. On that basis, the wrapping material was not a mere external adjunct but an input forming part of the end product for exemption purposes. The material therefore qualified as a component part or raw material used in manufacture, and the relevant exemption from excise duty applied.

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Issues: Whether wrapping paper used for packing or wrapping paper reams/reels formed part of the manufacture of the finished goods and constituted a component part or raw material so as to qualify for non-levy of excise duty under the relevant exemption provisions.

Analysis: The relevant legal framework treated excise as a duty on manufacture, and manufacture was understood to be complete only when the goods came into existence as marketable goods. The Court applied the settled principle that processes incidental or ancillary to bringing goods into marketable condition fall within manufacture. On the facts, paper was marketed in wrapped condition, and wrapping was an essential requirement for sale and marketability. Accordingly, the wrapping paper used in that process was not a mere external adjunct but an input forming part of the end product for purposes of the exemption.

Conclusion: Wrapping paper was rightly treated as a component part or raw material used in the manufacture of marketable goods, and the assessees were entitled to the benefit of the exemption. The revenue's appeals therefore failed.

Final Conclusion: The decision affirms that where packing or wrapping is essential to make the goods marketable, the material used for that purpose is part of manufacture for excise purposes and attracts the applicable exemption treatment.

Ratio Decidendi: Materials used in an essential process that makes goods marketable form part of manufacture and may qualify as component parts or raw materials for exemption from excise duty.

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