Manufacture by bituminisation: coated paper becomes a distinct dutiable commodity under excise tariff principles.

Bituminisation of duty-paid kraft paper was treated as manufacture because it produced a commercially distinct product with a different character, name and use. The Tribunal relied on the Larger Bench view that bituminised paper is a separate marketable commodity, and noted that the process adds strength and impermeability to water. A contrary High Court decision cited by the assessee was not followed because the Larger Bench ruling was binding. The product was therefore held dutiable under Tariff Item 17, and the department's appeal succeeded.

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Issues: Whether bituminised waterproof paper obtained from duty-paid kraft paper amounts to manufacture and is liable to central excise duty under Tariff Item 17.

Analysis: The Tribunal applied the principle that manufacture occurs when a process results in a commercially distinct and separate commodity with a different character, name, and use. It relied on the earlier Larger Bench view that bituminised paper is a distinct marketable product and noted that bituminisation imparts additional qualities such as strength and impermeability to water. The contrary High Court decision cited by the assessee was not followed because the Larger Bench decision had already settled the issue and was binding on the Tribunal.

Conclusion: The process of bituminisation amounts to manufacture and the product is dutiable. The appeal of the department succeeds and the assessee's contention fails.

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