Manufacture test for processed steel castings: machining and polishing created a new excisable commodity under Tariff Item 68.

Machined and polished steel castings were held to have lost their original identity and become a new excisable commodity because the processing gave them a distinct commercial name, character and end-use as Railway component parts. Applying the test of manufacture, the decisive question was whether the operations produced a commercially different article. On the facts, the processed goods were classifiable under Tariff Item 68, even though duty had already been paid on the castings under Tariff Item 26AA(V). The principle applied was that excise may arise again when a distinct commodity emerges at a later stage of processing.

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Issues: Whether machined and polished steel castings continued to remain steel castings, or whether the process brought into existence a new and distinct commodity chargeable to duty under Tariff Item 68, notwithstanding duty already paid under Tariff Item 26AA(V).

Analysis: The steel castings were admittedly liable to duty under Tariff Item 26AA(V) at the casting stage. After machining and polishing, however, they acquired separate commercial identity, distinct names, and specific end-use as component parts for the Railways. Applying the test of manufacture, the decisive question was whether the processing resulted in a commercially different article with a distinct character, use, and name. On the facts, the processed goods no longer remained mere castings but became excisable machine parts falling under Tariff Item 68. The plea that duty could not be levied again was rejected because excise is attracted at each stage where a different excisable commodity emerges.

Conclusion: The processed goods were correctly held to be new excisable commodities classifiable under Tariff Item 68, and the demand was sustainable.

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