Excisability and manufacture under central excise law: High Court lacked jurisdiction, and panel processing was not manufacture.
A dispute on excisability has a direct and proximate relation to assessment and therefore falls within the Supreme Court's exclusive appellate domain under Section 35L; the High Court lacked jurisdiction under Section 35G to decide that issue. Cutting, grooving and routing aluminium composite panels merely adapted them for installation and did not bring into existence a new, distinct and marketable commercial product with a different name, character or use; the process was therefore not manufacture under Section 2(f). The assessee succeeded on both jurisdiction and merits, and the High Court's judgment was set aside.
Issues: (i) whether the High Court had jurisdiction under Section 35G of the Central Excise Act, 1944 to decide the excisability of the aluminium composite panels; and (ii) whether cutting, grooving and routing of the aluminium composite panels amounted to manufacture under Section 2(f) of the Central Excise Act, 1944.
Issue (i): whether the High Court had jurisdiction under Section 35G of the Central Excise Act, 1944 to decide the excisability of the aluminium composite panels.
Analysis: An appeal under Section 35G is excluded where the order of the Tribunal concerns a question having a relation to the rate of duty or the value of goods for assessment. The determination whether goods are excisable is a necessary precursor to assessment and is directly and proximately connected with the rate of duty. Section 35L, read with its clarificatory sub-section (2), channels such disputes to the Supreme Court and confirms that excisability falls within the excluded class of questions.
Conclusion: The High Court lacked jurisdiction to decide the question of excisability; the proper forum was the Supreme Court.
Issue (ii): whether cutting, grooving and routing of the aluminium composite panels amounted to manufacture under Section 2(f) of the Central Excise Act, 1944.
Analysis: Manufacture requires emergence of a new and distinct commercial product with a different name, character or use, and marketability of the resultant goods must also be shown. The process undertaken only cut the panels to size, grooved them and adapted them for installation. It did not alter the essential identity or commercial character of the goods, and the Revenue did not establish that the processed panels emerged as distinct marketable goods.
Conclusion: The process did not amount to manufacture and the resultant goods were not shown to be dutiable excisable goods.
Final Conclusion: The appeal was allowed, the High Court's judgment was set aside, and the assessee succeeded on both jurisdiction and merits.
Ratio Decidendi: A dispute on excisability is a question having a direct and proximate relation to assessment and therefore lies within the Supreme Court's exclusive appellate domain under Section 35L, and superficial processing that does not create a distinct marketable commercial product is not manufacture.
TaxTMI 
AI Drafter ✕
TaxTMI 
