Packing and manufacture for excise: statutory sale requirements did not make loose fertilisers incomplete goods.

Packing of fertilisers was held not to be an incidental or ancillary process of manufacture on these facts, because the goods were complete in loose form and there was no trade evidence that packing entered into their character. A statutory packing requirement for sale under the Fertiliser Control Order was treated as regulatory only and did not alter the excise concept of manufacture. The later valuation provision in Section 4(4)(d)(i) was not applied to the period in dispute. The disputed fertilisers were therefore not rendered excisable merely by the need to pack them, and refund entitlement was affirmed.

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Issues: Whether packing of fertilisers in the facts of the case was a process incidental or ancillary to manufacture so that manufacture was incomplete until packing, and whether the duty paid on clearance of the loose stock after 1-3-1969 was refundable.

Analysis: The relevant levy commenced only on 1-3-1969, when the goods were already in loose condition. The later-declared valuation provision in Section 4(4)(d)(i) could not govern the period in dispute. The controlling question was not valuation but whether manufacture of the fertilisers was complete without packing. The goods were not shown to be unmarketable in loose condition, and no trade evidence established that packing entered into the character of the fertilisers themselves. The packing requirement under the Fertiliser Control Order served a regulatory purpose unrelated to the definition of manufacture under excise law. The earlier decision of the Madras High Court on the same factual situation was followed as directly applicable.

Conclusion: Packing was not an incidental or ancillary process to manufacture in the present case, and the fertilisers were complete goods before packing. The appeal failed.

Final Conclusion: The Tribunal affirmed refund entitlement by holding that the disputed fertilisers were not rendered excisable merely because they had to be packed for sale, and the Revenue's challenge was rejected.

Ratio Decidendi: Packing amounts to an incidental or ancillary process of manufacture only where it enters into the character of the article itself; a statutory packing requirement for sale, standing alone, does not make packing part of manufacture for excise purposes.

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