Manufacture and excisability turn on emergence of a commercially distinct commodity; prior Rule 56C use did not bar the plea.

Excisability depended on whether the goods were the result of manufacture and whether a prior recourse to Rule 56C barred the appellant from denying manufacture. The Tribunal treated excisability as a legal question and held that earlier use of Rule 56C did not preclude the appellant from contending that no manufacturing activity had occurred. Following its earlier decision on identical goods, it found that no new commercially distinct commodity came into existence and the Revenue had not established manufacture. The goods were therefore not excisable, and the duty demand was unsustainable.

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Issues: Whether the goods in question were the result of manufacture and therefore excisable, and whether the appellant could be denied the plea of non-manufacture because it had earlier availed Rule 56C procedure.

Analysis: The Tribunal held that the question of excisability is a legal question and the appellant was not precluded from raising the plea that no manufacturing activity had taken place merely because it had earlier proceeded under Rule 56C. It further followed its earlier decision on identical goods and noted that no new commercially distinct commodity came into existence. On that basis, the manufacture alleged by the Revenue was not established.

Conclusion: The goods were held not to be the result of manufacture, and no duty was payable on them. The demand was therefore unsustainable, and the appeal succeeded.

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