Mere cleaning and compression of fibre is not manufacture unless a new excisable commodity comes into existence.

Cleaning and compressing cotton fibre or viscose staple fibre into laps was held not to amount to manufacture because the fibres retained their essential identity and no new or distinct excisable commodity emerged. The governing principle applied was that excise duty arises only where processing changes name, character and use so as to create a separately dutiable product. The tariff entry relied on by the department was found inapplicable on these facts, and the duty demand and penalty were set aside with consequential relief.

---

---

Issues: Whether cleaning and compressing cotton fibre or viscose staple fibre into laps amounts to manufacture and attracts duty under Tariff Item 68 of the erstwhile Central Excise Tariff.

Analysis: The process undertaken consisted only of cleaning the fibres and compressing them into an elongated form. The fibre retained its essential identity and did not undergo a transformation into a new and distinct commodity. Since excise duty is attracted only when manufacture results in emergence of a new excisable product, the laps could not be treated as a separately dutiable product. The authorities relied on by the assessee correctly stated the governing principle that manufacture requires a change in name, character and use, while the cited laminations case was inapplicable because the tariff entry there specifically covered the product brought into existence.

Conclusion: The process did not amount to manufacture and no duty was payable on the laps; the assessee succeeded on this issue.

Final Conclusion: The appeal was allowed and the duty demand and penalty were set aside, with consequential relief to the assessee.

Ratio Decidendi: Mere cleaning and compression of fibre into a different form does not constitute manufacture unless it brings into existence a new and distinct excisable commodity.

---