Mechanical cutting and slitting of tissue paper rolls does not amount to manufacture when the product keeps its essential character.

Mechanical cutting, slitting, rewinding and packing of duty-paid jumbo rolls of tissue paper into facial tissues, napkins and tissue rolls did not amount to manufacture under Section 2(f) of the Central Excise Act. The processed goods retained the same essential character as tissue paper and did not acquire a new name, character, end-use or commercial identity. The absence of any specific section note or chapter note deeming the activity to be manufacture was significant, and separate tariff classification of the smaller products was not sufficient by itself to create excisability.

---

---

Issues: Whether cutting and slitting duty-paid jumbo rolls of tissue paper into smaller sizes of facial tissues, napkins and tissue rolls amounted to manufacture under Section 2(f) of the Central Excise Act.

Analysis: The conversion process consisted only of mechanical cutting, slitting, rewinding and packing of already duty-paid jumbo rolls. The resulting products retained the same essential character as tissue paper and did not acquire a new name, character, end-use or commercial identity. The absence of a specific section note or chapter note deeming such activity to be manufacture was significant. The separate tariff classification of smaller-sized tissue products did not by itself establish manufacture, and the reasoning in comparable authorities on slitting or cutting operations supported the assessee's case.

Conclusion: The process did not amount to manufacture and the goods were not excisable; the issue is decided in favour of the assessee.

---