Manufacture test in excise law: lacquering and metallising polyester film was not a taxable transformation.

Lacquering and metallising of duty-paid polyester film was examined under the manufacture test in section 2(f). The process was held not to amount to manufacture because it did not bring into existence a new and distinct commercial commodity with a different identity, character or use; mere surface treatment and colour change were insufficient, and the tariff reference to lacquered or metallised film could not by itself establish exigibility to excise duty. The objection based on alternative appellate remedy was also rejected, as the writ had been entertained earlier and interim orders had continued for years, making it inappropriate to decline merits-based review. The excise demand was set aside and refund of duty paid under protest was directed.

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Issues: (i) Whether lacquering and metallising of duty-paid polyester film amounts to manufacture under section 2(f) and renders the processed film exigible to excise duty. (ii) Whether the writ petition should be declined on the ground that an alternative appellate remedy was available.

Issue (i): Whether lacquering and metallising of duty-paid polyester film amounts to manufacture under section 2(f) and renders the processed film exigible to excise duty.

Analysis: Manufacture requires emergence of a new and distinct commercial commodity having a different identity, name, character or use. Mere processing, without transformation into a different marketable product, is not enough. On the facts, lacquering and metallising of polyester film only altered its colour and no material showed that the processed film acquired special properties, a separate market identity, or a different use from plain polyester film. The mere reference to lacquered or metallised film in the tariff entry did not by itself establish manufacture where the basic test was not satisfied.

Conclusion: The process did not amount to manufacture and the levy of excise duty on lacquered or metallised polyester film was not sustainable.

Issue (ii): Whether the writ petition should be declined on the ground that an alternative appellate remedy was available.

Analysis: Although the impugned orders were appealable, the writ petition had been entertained long earlier and interim orders had been operating for years. In those circumstances, it was not proper to refuse adjudication on merits merely because another remedy had existed at the relevant time. The challenge was therefore examined in writ jurisdiction.

Conclusion: The objection based on alternative remedy was rejected.

Final Conclusion: The petition succeeded, the excise demand on lacquered or metallised polyester film was set aside, and refund of duty paid under protest was directed, while no interest beyond the limited direction granted was awarded.

Ratio Decidendi: A process amounts to manufacture only when it brings into existence a new and distinct commercial commodity with a different identity, character or use; mere processing or surface treatment that does not produce such a change is not exigible to excise duty as manufacture.

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