Manufacture of printed cartons not established where folding, stapling and label affixation did not create a new commodity.

Folding and stapling flattened cartons did not amount to manufacture because the cartons remained cartons and no new commodity came into existence; the tariff description itself covered cartons, boxes and containers, including flattened or folded cartons, so duty was not attracted. Pasting printed labels on plain cartons also did not establish that the cartons became printed cartons, as no evidence showed a trade understanding to that effect. The burden to prove the classificatory basis for duty lay on the Revenue, and it was not discharged, so the demand was not sustainable.

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Issues: Whether folding and stapling flattened cartons, and pasting printed labels on plain cartons, amounted to manufacture of printed cartons so as to attract duty under the relevant tariff headings.

Analysis: The flattened cartons purchased from the market remained cartons even after folding and stapling, and no new commodity came into existence. The tariff description itself covered cartons, boxes and containers including flattened or folded cartons, which reinforced that such conversion did not amount to manufacture. As regards pasting of printed labels on plain cartons, the Revenue led no evidence to show that such affixation converted a plain carton into a printed carton as understood in trade. The burden to establish the classificatory basis for duty lay on the Revenue, and that burden was not discharged.

Conclusion: The process undertaken by the respondent did not amount to manufacture of printed cartons, and the demand of duty was not sustainable. The issue was decided in favour of the assessee.

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