Doubling and multifolding yarn is not manufacture unless it creates a new marketable commodity, so duty demand fails.

Doubling or multifolding duty-paid single yarn did not amount to manufacture because it did not result in a new and distinct commodity. The settled principle applied was that excise duty can arise only where a process brings into existence a marketable new product; absent a new product, marketability does not arise independently. The extended definition of manufacture under Section 2(f) of the Central Excise Act, 1944 and the chapter notes did not change that position on these facts. Accordingly, the duty demand based on doubling and multifolding yarn was unsustainable.

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Issues: Whether the process of doubling or multifolding duty-paid single yarn amounts to manufacture so as to create an excisable new product, and whether the demand for duty could be sustained on that basis.

Analysis: The appeal was decided on the footing that the binding precedents had already settled that doubling or multifolding yarn does not bring into existence a new commodity. The reasoning proceeded on the principle that marketability becomes relevant only after a new product is shown to have come into existence; if the process itself does not result in a new commodity, the question of marketability does not arise. The order also noted that the extended definition of manufacture under Section 2(f) of the Central Excise Act, 1944 and the chapter notes did not alter that conclusion for the facts under consideration.

Conclusion: The process of doubling and multifolding yarn did not amount to manufacture of a new excisable product, and the duty demand was unsustainable.

Ratio Decidendi: A process is not manufacture unless it results in a new and distinct marketable commodity; absent a new product, marketability and duty liability do not arise.

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