Minimum packing as part of manufacture may bring wrapping paper within excise exemption for marketable packed paper.

Normal minimum packing required to make paper marketable may be treated as a process incidental or ancillary to manufacture under excise law, so wrapping paper used for packing reams or reels can qualify as material used in the manufacture of the completed commercial article. The majority reasoned that trade practice treats the packed ream or reel as the marketable excisable commodity, with the wrapper forming part of the finished product, and that the wording difference between Rule 56A and amended Rules 9 and 49 did not change that substance. The dissent viewed wrapping as a post-manufacturing distribution step, not part of manufacture, though it noted possible relief under Rule 56A if its conditions were met.

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Issues: Whether wrapping or packing paper used for packing other varieties of paper is consumed or utilised as raw material or component part in the manufacture of any other commodity so as to attract the exemption under amended Rules 9 and 49 of the Central Excise Rules, 1944.

Analysis: The majority treated the relevant inquiry as whether the packed paper, as understood in trade and industry, is the marketable excisable commodity and whether the wrapping paper forms part of the process by which that commodity is completed. It noted that Section 2(f) of the Central Excises and Salt Act, 1944 includes processes incidental or ancillary to completion of the manufactured product, and that normal minimum packing required to make the product marketable is such a process. On the trade materials and industry practice placed before it, the majority found that a ream or reel of paper is ordinarily treated as the commercial article, with the wrapper included as part of the finished packed paper. It also held that the slight difference in wording between Rule 56A and amended Rules 9 and 49 did not alter the substance, because in the context of marketable packed paper the wrapping paper functioned as part of the manufacture of the completed excisable commodity.

Conclusion: The wrapping or packing paper qualified for the benefit of amended Rules 9 and 49, and the exemption was available.

Dissenting Opinion: The dissenting member held that packing or wrapping other varieties of paper was only a post-manufacturing act for convenient distribution and did not amount to a process incidental or ancillary to manufacture. On that view, wrapping paper was neither raw material nor component part of the finished paper, though relief could still be available under Rule 56A if its conditions were satisfied.

Ratio Decidendi: Normal minimum packing that is integral to making an excisable product marketable may be treated as a process incidental or ancillary to manufacture, and the materials used for such packing may qualify as raw material or component part for the relevant excise exemption.

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