Manufacture test for cut and levelled coils: sheets and plates were not a distinct product, so excise demand and penalties failed.

Leveling and cutting CR/HR coils or strips into sheets and plates was treated as not amounting to manufacture because the processed goods did not emerge as a distinct commercially different product from the inputs. The later Board circular, issued in light of the Delhi HC ruling on the same issue, governed the dispute, and the contrary Supreme Court authority relied on by the department was found inapplicable on these facts. The excise duty demand was therefore unsustainable, and the consequential penalties could not survive.

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Issues: Whether the process of leveling and cutting CR/HR coils or strips into sheets and plates amounts to manufacture so as to attract excise duty and consequential penalties.

Analysis: The dispute turned on whether the processed sheets and plates emerged as a distinct and commercially different product from the input coils or strips. The Board's later circular, issued in the light of the Delhi High Court ruling that the process did not amount to manufacture, governed the controversy. In those circumstances, the contrary reliance on the Supreme Court decision cited by the department was held inapplicable to the facts of this case.

Conclusion: The process did not amount to manufacture, the duty demand was unsustainable, and the penalties also could not survive.

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