Mere packing and labelling does not amount to manufacture when no distinct new product emerges for excise purposes.

Packing tyre O-rings in containers and affixing product codes and part numbers did not amount to manufacture under the Central Excise Act because the activity did not bring into existence a distinct and identifiable new product. The O-rings were classified as rubber rings under Chapter Tariff Item 4016 93 20, and the record showed they were not confined to automobile use or treated as goods of Chapter 87 for Third Schedule purposes. Mere packing and labelling was insufficient to attract central excise duty, and the contrary view was not sustained.

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Issues: Whether packing tyre O-rings in containers and affixing product code and part number amounts to manufacture under section 2(f)(iii) of the Central Excise Act, 1944 and makes the goods liable to central excise duty.

Analysis: The product was specifically described under Chapter Tariff Item 4016 93 20 of the First Schedule to the Central Excise Tariff Act, 1985 as rubber rings (O-rings). The record showed that the O-rings were not exclusively used as automobile parts and were not confined to the category treated as goods of Chapter 87 for the purpose of the Third Schedule. The process undertaken by the appellants was only packing the O-rings and putting labels and product particulars on the containers. No distinct and identifiable new product emerged from that activity, and mere packing or labelling did not satisfy the requirement of manufacture. The classification adopted by the original authority was, therefore, accepted and the contrary view of the appellate authority was not sustained.

Conclusion: The activity did not amount to manufacture and no central excise duty was payable on the tyre O-rings removed from the factory.

Final Conclusion: The impugned order was set aside and the appeal succeeded in favour of the appellants.

Ratio Decidendi: Mere packing and labelling of a product does not amount to manufacture unless the process brings into existence a distinct and identifiable new product; classification under the tariff must be applied on the basis of the actual description and use of the goods.

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