Manufacture by lamination of kraft paper creates distinct excisable goods and confirms excise liability.

Processing duty-paid kraft paper by coating, impregnating or lamination into bituminised waterproof packing paper, polythene-lined kraft packing paper, waxed kraft packing paper and similar products was treated as manufacture because the process produced commercially distinct goods different from ordinary kraft paper. The fact that the base material had already been purchased in the market did not exclude excise liability once manufacture was established. The Court also rejected the need for additional evidence of market identity after the transformation was shown. The resultant products were therefore regarded as excisable under Item 17(2), and the departmental assessment of excise duty was restored.

---

---

Issues: Whether the processing of kraft paper by coating, impregnating and lamination into bituminised waterproof packing paper, polythene-lined kraft packing paper, waxed kraft packing paper and similar products amounted to manufacture and rendered the resultant goods excisable under Item 17(2) of the Schedule to the Central Excises and Salt Act, 1944.

Analysis: The processing undertaken in the factory was held to bring into existence new products different from ordinary kraft paper. Reliance was placed on the principle that lamination and similar processing of duty-paid kraft paper result in distinct goods known in the market as separate products. Once the process amounts to manufacture, the fact that the base material was kraft paper purchased from the market does not avoid excise liability. The Court also rejected the contention that additional evidence of market identity was necessary after manufacture was established.

Conclusion: The processed kraft paper products were held to be manufactured goods and liable to excise duty under Item 17(2); the finding was against the assessee and in favour of the Revenue.

Final Conclusion: The appeal succeeded, the High Court's order was set aside, and the departmental assessment of excise liability was restored.

Ratio Decidendi: When a process of coating, impregnating or lamination transforms kraft paper into goods that are commercially distinct from the original paper, the process constitutes manufacture and the resultant goods are excisable.

---