Court rules cutting jumbo rolls of Graphic art films not 'manufacture' for Central Excise duty

The Court held that cutting jumbo rolls of Graphic art films into smaller sizes did not constitute 'manufacture' for the purpose of levying Central Excise duty. The Court ruled in favor of the petitioner, stating that the petitioner was not required to obtain a Central Excise license as long as the activities were limited to cutting jumbo rolls into flats and plates of smaller sizes, as this process did not result in the creation of a new substance as per the definition of 'manufacture'.

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Issues involved: Determination of whether the process of cutting jumbo rolls of graphic art films into smaller sizes constitutes 'manufacture' for the purpose of levying Central Excise duty.

Summary:
The petitioner imported jumbo rolls of Graphic art films, which were later slit into various widths and cut into different lengths before being marketed in India. The Central Excise Tariff specified rules under Section 11 for photographic and cinematographic items. Initially, the Central Board of Excise and Customs clarified that cutting and repacking jumbo rolls would not amount to 'manufacture'. However, a subsequent clarification stated that converting jumbo rolls into plates and film in flat form would be considered a manufacturing process due to a change in the Tariff entry.

The petitioner argued that cutting jumbo rolls into smaller sizes did not constitute 'manufacture' based on previous clarifications. The respondents contended that the process of converting jumbo rolls into flats was indeed a manufacturing process as it resulted in a distinct commodity. The Court noted the definition of 'manufacture' as bringing into existence a new substance and held that merely cutting jumbo rolls into flats did not meet this criteria.

The Court further explained that different Tariff entries applied to distinct manufactured products, and since no new manufacturing process occurred by cutting jumbo rolls into flats, the petitioner was not required to obtain a Central Excise license. The Court ruled in favor of the petitioner, stating that the direction to obtain a license was not valid as long as the petitioner's activities were limited to cutting jumbo rolls into flats and plates of smaller sizes.

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