Bituminisation as manufacture: kraft paper becomes a distinct dutiable commodity when it gains new commercial identity and utility.

Bituminisation of kraft paper was treated as manufacture because it produced a commercially distinct commodity with a separate name, character and use. The Tribunal applied the principle that manufacture arises when a new product emerges, and held that the process adds strength and impermeability to water, thereby creating bituminised paper as a dutiable excisable commodity under the tariff entry. The appeals were rejected.

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Issues: Whether bituminisation of kraft paper amounts to manufacture of a new excisable commodity attracting duty under Item 17(2) of the Central Excise Tariff.

Analysis: The Tribunal followed its earlier Larger Bench decision holding that bituminised paper is a distinct commercial commodity and that the process of bituminisation brings into existence a new product with a separate name, character and use. Applying the principle that manufacture occurs when a commercially known distinct commodity emerges, the Tribunal held that the process of bituminisation imparts additional qualities such as strength and impermeability to water and therefore constitutes manufacture.

Conclusion: The process of bituminisation amounts to manufacture and the resulting product is dutiable; the appeals were rejected.

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