Processing of structural steel by cutting, drilling and galvanisation was not manufacture for the relevant excise period.

Cutting, drilling, fitting and galvanisation of angles, channels and flats used for structures and electric poles did not amount to manufacture because the process did not create a new and distinct excisable commodity. The later tariff deeming provision on galvanisation was not applicable to the relevant period, so it could not expand excise liability retrospectively. The treatment of the activity as service taxable work also supported its character as processing rather than manufacture, with the result that central excise duty and related penalty relief were not sustainable on that basis.

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Issues: Whether cutting, drilling holes and galvanization of angles, channels and flats of mild steel, and galvanization of similar materials supplied by the customer, amounted to manufacture and were classifiable under Chapter 7308 rather than Chapter 7216 of the Central Excise Tariff Act, 1985.

Analysis: The disputed activity consisted of cutting, drilling, fitting and galvanization of angles, channels and flats used for structures and electric poles. The Tribunal noted that the issue had already been settled by higher judicial forums holding that such processing does not bring into existence a new and distinct excisable commodity. It also noted that the later deeming provisions in the tariff relating to galvanization were not applicable to the material period in dispute. The fact that the appellant had obtained service tax registration and paid service tax on the galvanization activity was also consistent with the character of the work as processing rather than manufacture.

Conclusion: The activity did not amount to manufacture and the demand of central excise duty could not be sustained on that basis.

Final Conclusion: The assessee succeeded on the merits, the duty demand and connected penalty-related reliefs were set aside, and the Revenue's challenge failed.

Ratio Decidendi: Cutting, drilling and galvanization of angles, channels and flats used for structures do not amount to manufacture for the relevant period unless a specific deeming provision applicable to that period expressly brings the process within excise levy.

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