Manufacture and marketability in excise: processed nylon screen sleeves were treated as sensitised textiles, with marketability remitted for evidence.

Coating, exposing and developing bare nylon screen sleeves was treated as a manufacturing process because it transformed the material into a distinct printable article. The processed sleeves were also regarded as falling within Chapter 37.04 as sensitised textiles under the Central Excise Tariff. However, excisability still depended on marketability, and the record was found insufficient on that point. The finding on marketability was therefore set aside and the question was remitted for fresh decision on evidence after hearing both sides.

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Issues: (i) Whether the process of coating, exposing and developing bare nylon screen sleeves amounts to manufacture and whether the goods are classifiable as sensitised textiles under Chapter 37.04 of the Central Excise Tariff Act, 1985. (ii) Whether the goods are marketable or capable of being marketed so as to attract excise duty.

Issue (i): Whether the process of coating, exposing and developing bare nylon screen sleeves amounts to manufacture and whether the goods are classifiable as sensitised textiles under Chapter 37.04 of the Central Excise Tariff Act, 1985.

Analysis: The bare nylon screen sleeves were subjected to photo-sensitive chemicals and exposure processes based on photographic principles, after which the designs were transferred and the sleeves became fit for printing. The process brought about a transformation into a distinct new article. Chapter 37.04 covers photographic textiles exposed but not developed, and sub-heading 3704.20 covers sensitised textiles. On that basis, the processed nylon screen sleeves were treated as falling within Chapter 37.04.

Conclusion: The process amounted to manufacture, and the goods were classifiable under Chapter 37.04 as sensitised textiles, against the assessee.

Issue (ii): Whether the goods are marketable or capable of being marketed so as to attract excise duty.

Analysis: Marketability is a necessary condition for excisability, and goods mentioned in the tariff schedule do not attract duty unless they are marketable or capable of being marketed. The record did not contain sufficient evidence on marketability, so the issue required reconsideration on evidence after hearing both sides.

Conclusion: The finding on marketability was set aside and the matter was remanded for fresh decision on that question.

Final Conclusion: The adjudication on classification and manufacture went against the assessee, but the central question of marketability was left for fresh determination, resulting in a remand.

Ratio Decidendi: A process that converts bare nylon screen sleeves into a distinct printable article amounts to manufacture, and goods covered by the tariff are still chargeable only if marketability is established on evidence.

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