Sound recording on duty-paid cassette tapes is not manufacture unless it creates a new excisable product.

Mere recording of sound on duty-paid magnetic or cassette tapes does not amount to manufacture under Section 2(f) unless the process creates a new and distinct excisable product with a different name, character or use. The tariff description covering recorded and unrecorded cassettes fixes duty classification for goods in their manufactured state, but it does not itself convert sound recording into a manufacturing process. As no new commodity came into existence, the charging provision under Section 3 was not attracted and duty demand and penalties could not be sustained.

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Issues: (i) Whether mere recording of sound on duty-paid magnetic or cassette tapes amounts to manufacture under the Central Excises and Salt Act, 1944 and the relevant tariff entry. (ii) Whether the appellant thereby manufactured excisable goods and became liable to the duty and penalties imposed.

Issue (i): Whether mere recording of sound on duty-paid magnetic or cassette tapes amounts to manufacture under the Central Excises and Salt Act, 1944 and the relevant tariff entry.

Analysis: The definition of manufacture under Section 2(f) is inclusive and must still be understood in its natural sense, requiring a process that brings into existence a new and different article. Mere recording of sound on blank or duty-paid cassette tapes does not fall within any specific enlargement of the definition. The tariff entry describing articles used for sound recording, including recorded and unrecorded cassettes, classifies the goods for duty purposes but does not itself convert the act of recording into manufacture. The expression "whether recorded or not" indicates dutiability of the articles in their manufactured state and does not create a separate manufacturing process by recording alone.

Conclusion: Mere recording of sound on duty-paid magnetic or cassette tapes is not manufacture.

Issue (ii): Whether the appellant thereby manufactured excisable goods and became liable to the duty and penalties imposed.

Analysis: Since the appellant was only recording sound on duty-paid cassette tapes and was not himself manufacturing sound-recorded magnetic tapes or sound-recorded cassette tapes as goods, the charging provision under Section 3 was not attracted. The articles retained their identity, and no new commodity with a distinct name, character, or use came into existence. As the basic condition for levy was absent, the duty demand and consequential penalties could not stand.

Conclusion: The appellant did not manufacture excisable goods and was not liable to the duty demand or penalties.

Final Conclusion: The demand of excise duty and the connected penalties were unsustainable, and the impugned order was set aside in full.

Ratio Decidendi: Sound recording on duty-paid cassette tapes, by itself, does not amount to manufacture unless the process creates a new excisable product within the statutory meaning of manufacture and the charging provision is otherwise attracted.

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