Packing and labelling of batteries and chargers is not manufacture unless a new marketable product emerges or statute deems it so.

Mere packing of already manufactured rechargeable batteries and chargers into blister packs, together with labelling for marketing, does not constitute manufacture under the Central Excise Act unless the process brings into existence a new marketable commodity with a distinct name, character and use, or is expressly deemed to be manufacture by a relevant Chapter Note or Section Note. Because the goods retained their essential character and no deeming provision covered the activity, the duty demand was unsustainable; interest and penalty also could not survive. The appeals were therefore allowed and the impugned orders were set aside.

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Issues: Whether the activity of packing rechargeable batteries with chargers in blister packs and labelling them as marketed products amounted to manufacture under Section 2(f) of the Central Excise Act, 1944, and if not, whether the duty demand, interest and penalty could survive.

Analysis: The activity involved putting together already manufactured chargers and batteries and affixing labels for marketing. No new and distinct commercial commodity emerged, and the goods retained their essential character. The relevant test is whether the process brings into existence a new and marketable product with a distinct name, character and use, or falls within a statutory deeming provision. The goods in question were not shown to be covered by any Chapter Note or Section Note deeming such packing or labelling to be manufacture, and the processes in issue did not answer the statutory description of manufacture for the goods involved.

Conclusion: The activity did not amount to manufacture, and the duty demand was unsustainable; consequently, interest and penalty also could not be sustained.

Final Conclusion: The appeals were allowed and the impugned orders were set aside.

Ratio Decidendi: Mere packing and labelling of already manufactured goods does not constitute manufacture unless a new marketable commodity emerges or the process is expressly deemed to be manufacture by the statute.

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