Manufacture by printing glass bottles includes cost in assessable value when process creates commercially distinct goods

A show cause notice for re-determination of assessable value was held valid even though it did not expressly cite Section 11A, because proceedings for short levy or non-levy fell within that provision and the statutory basis was otherwise clear. Printing and decorating plain glass bottles in a segregated unit was treated as manufacture because the process produced commercially distinct printed bottles with a different character and use. The segregated premises were regarded as part of the factory precincts, so the cost of printing formed part of the assessable value. On that reasoning, the demand was upheld and the appeal failed.

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Issues: (i) whether the show cause notice for re-determination of assessable value was without authority of law for non-mention of Section 11A; and (ii) whether printing and decorating plain glass bottles in the segregated unit amounted to manufacture and whether the cost of such printing was includible in the assessable value, including the question whether the segregated unit formed part of the factory.

Issue (i): Whether the show cause notice for re-determination of assessable value was without authority of law for non-mention of Section 11A.

Analysis: The notice was issued to re-determine assessable value, and such re-determination could result in short levy or non-levy. Proceedings of that nature fall within the ambit of Section 11A. The omission to mention the section expressly did not invalidate the notice, since the power to proceed existed and the statutory basis was otherwise clear.

Conclusion: The show cause notice was valid and not vitiated for want of reference to Section 11A.

Issue (ii): Whether printing and decorating plain glass bottles in the segregated unit amounted to manufacture and whether the cost of such printing was includible in the assessable value, including the question whether the segregated unit formed part of the factory.

Analysis: The segregated premises were treated as premises within the precincts of the factory. The process of printing changed plain bottles into printed bottles, which were commercially distinct and separately known goods with a different use and character. Applying the settled test of manufacture, the transformation of plain bottles into printed bottles constituted manufacture. Since the printing activity was carried on within the factory precincts, the added cost formed part of the assessable value.

Conclusion: Printing and decorating amounted to manufacture, the segregated unit formed part of the factory, and the cost of printing was includible in the assessable value.

Final Conclusion: The demand was upheld on merits, and the appeal failed in full.

Ratio Decidendi: A process amounts to manufacture when it transforms an article into a commercially distinct commodity with a different character, use or name, and the value of such process is includible in assessable value when carried on within the factory precincts.

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