Ordinary commercial meaning of manufacture controls import exemptions, and confiscation liability can survive delayed seizure notice.

For Customs import restrictions, "manufacture" is read in its ordinary commercial sense, requiring a transformation into a different article with a distinct character or use; mere granulation or filling imported chloramphenicol powder into capsules did not make it Nepalese manufacture, so the exemption from licence did not apply and the import remained prohibited. Liability to confiscation under sections 111 and 112 is independent of seizure under section 110; delayed notice or an order releasing the goods does not by itself bar adjudication or penalty. The article therefore states that the import was unlawful and penalty proceedings could still be sustained.

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Issues: (i) Whether capsuling or granulating imported chloramphenicol powder in Nepal amounted to "manufacture" so as to make the goods produce of or manufactured in Nepal and permit import without licence; (ii) Whether penalty under the Customs Act could be sustained where notice under section 110 was issued beyond six months and the goods were ordered to be released.

Issue (i): Whether capsuling or granulating imported chloramphenicol powder in Nepal amounted to "manufacture" so as to make the goods produce of or manufactured in Nepal and permit import without licence.

Analysis: The definition of manufacture in the Drugs and Cosmetics Act was held inapplicable to the import restriction under the Customs regime. For the purpose of the Nepal import exemption and the prohibition notification, manufacture had to bear its ordinary commercial sense, namely a change or transformation resulting in a different article with a distinct character or use. Mere granulation or filling powder into capsules did not produce a commercially different article or convert goods of third-country origin into Nepalese manufacture.

Conclusion: The goods were not manufactured in Nepal, and the import was prohibited and liable to action under the Customs law. The finding was against the assessee.

Issue (ii): Whether penalty under the Customs Act could be sustained where notice under section 110 was issued beyond six months and the goods were ordered to be released.

Analysis: The liability to confiscation under sections 111 and 112 was held to be distinct from actual confiscation or prior seizure under section 110. Section 110 dealt with seizure, whereas sections 111 and 112 turned on goods being liable to confiscation. Therefore, failure to seize the goods or delayed issuance of notice did not bar adjudication or imposition of penalty. The order of release did not negate liability to confiscation.

Conclusion: The penalty proceedings were validly maintainable despite the section 110 objection. The finding was against the assessee.

Final Conclusion: The writ petitions failed because the import was held not to be a lawful Nepalese manufacture and the Customs authorities were held competent to impose penalty on the basis of liability to confiscation, even though the goods had been ordered to be released.

Ratio Decidendi: For Customs import restrictions, manufacture must be understood in its ordinary commercial sense, and liability to confiscation under sections 111 and 112 is independent of actual seizure or confiscation under section 110.

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