Job-work carton printing and punching treated as manufacture, making excise duty payable and clearances includible for exemption limits.

Job-work printing and punching of cartons was treated as manufacture because the punching step completed the transformation of paper or board into cartons capable of being folded into the required shape. On the facts recorded, no material rebutted the view that manufacture was completed in the assessee's factory, so the activity fell within Section 2(f) of the Central Excises and Salt Act and excise duty became payable on the cartons produced. As the goods were dutiable clearances, their value was required to be included while testing eligibility under the small-scale exemption notification.

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Issues: Whether the printing and punching of cartons undertaken on job work amounted to manufacture so as to attract Central Excise duty and require inclusion of the resulting clearances for the purpose of the small-scale exemption.

Analysis: The process of punching was treated as the step that completed the conversion of paper or board into cartons capable of being folded into the required shape. No material was produced to rebut the view that manufacture was completed in the factory of the appellants. On that basis, the activity fell within the meaning of manufacture under Section 2(f) of the Central Excises and Salt Act, and duty became payable on the cartons so manufactured. Since the goods were dutiable clearances, their value had to be included while testing eligibility under the exemption notification.

Conclusion: The process amounted to manufacture, excise duty was payable, and the clearances were correctly taken into account for the exemption limit.

Final Conclusion: The appeal failed because the job-work activity was held to be excisable manufacture and the demand and exemption treatment were upheld.

Ratio Decidendi: Where the job-work process completes the transformation of raw material into a distinct excisable article in the assessee's factory, the activity constitutes manufacture and the resulting clearances are includible for exemption purposes.

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