Strict construction of manufacture deeming provision excludes aerosol filling and packing from Chapter Note-based excise liability.

Section 2(f)(ii) treats a process as manufacture only when it is specifically covered by the relevant Chapter Notes, which must be strictly construed. On the facts, filling liquid raw materials from 200 litre containers into aerosol cans, fitting caps and affixing labels was not repacking from bulk packs to retail packs, nor was it mere relabelling of the original containers, and it did not amount to any other treatment rendering the goods marketable within Chapter Note 6 of Chapter 34 or Chapter Note 10 of Chapter 38. The job worker's activity therefore fell outside the extended definition of manufacture, and the duty demand and penalties could not be sustained.

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Issues: Whether the activity of aerosol filling, packing, relabelling and retail packing undertaken by the job worker amounted to manufacture under section 2(f)(ii) of the Central Excise Act, 1944 read with Chapter Note 6 of Chapter 34 or Chapter Note 10 of Chapter 38 of the Central Excise Tariff Act, 1985, and the consequential liability to duty and penalty.

Analysis: The definition of manufacture under section 2(f)(ii) includes only those processes that are specifically treated as manufacture by the relevant Chapter Notes. Chapter Note 6 of Chapter 34 and Chapter Note 10 of Chapter 38 extend the concept only to labelling or relabelling of containers, repacking from bulk packs to retail packs, or adoption of any other treatment to render the product marketable to the consumer. The process in question involved receipt of liquid raw materials in 200 litre containers, filling into aerosol cans, fitting caps and affixing labels. The goods were not repacked from bulk packs to retail packs, because containers are distinct from bulk packs. Nor was there mere relabelling of the original containers, and the process did not amount to any other treatment of the raw materials so as to render them marketable within the meaning of the Chapter Notes. Since the deeming provision must be strictly construed, the job worker's activity did not fall within the extended definition of manufacture.

Conclusion: The process undertaken by the job worker did not amount to manufacture, and the duty demand and penalties could not be sustained.

Ratio Decidendi: A process is deemed manufacture only if it squarely falls within the specific language of the applicable Chapter Note, and a transfer from containers to retail packs is not the same as repacking from bulk packs to retail packs.

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