Power used in an intermediate manufacturing process defeats excise exemption for furniture made from sawn timber.

Furniture made from timber sawn with the aid of power did not satisfy the condition for exemption under Notification No. 179/77-C.E., because sawing timber was treated as part of the manufacturing process of the final furniture. The exemption under Rule 8(1) applied only where no process ordinarily carried on with the aid of power was involved in or in relation to manufacture. Use of power in this intermediate, manufacture-linked stage defeated the claim, even though the final furniture itself was not manufactured with power. On that basis, the goods remained liable to central excise duty under Item 68.

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Issues: Whether furniture manufactured from timber sawn with the aid of power was entitled to exemption from central excise duty under Notification No. 179/77-C.E. on the ground that the final manufacture of furniture was carried on without the aid of power.

Analysis: The exemption under Notification No. 179/77-C.E., issued under Rule 8(1) of the Central Excise Rules, 1944, applied to goods under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944, only where no process ordinarily carried on with the aid of power was involved in or in relation to their manufacture. Sawing of timber was held to be part of the manufacturing process of furniture. Since the timber used for the furniture had been sawn with the aid of power, the condition of manufacture without the aid of power was not satisfied. The earlier Supreme Court decision on similar facts was applied to hold that use of power in an intermediate process connected with manufacture defeated the exemption.

Conclusion: The furniture was not exempt from central excise duty and duty was payable under Item 68. The appeal was allowed in favour of the Revenue.

Ratio Decidendi: Where power is used in a process that forms part of or is in relation to the manufacture of the final excisable goods, the goods cannot claim exemption reserved for manufacture carried on without the aid of power.

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