TaxTMI 
TaxTMI 
2026 (7) TMI 1441
X X X X Extracts X X X X
X X X X Extracts X X X X
....ackaging materials i.e. polythene from various vendors and were supplying the same to the subsidiary company namely M/s. Freshpack Industries Pvt. Ltd./Bimbo Bakeries India Pvt. Ltd. for converting plastic polythene rolls into plastic polythene bags. During the course of investigation, the department noticed that M/s. Freshpack was paying service tax on conversion charges received from M/s. Ready Roti and from M/s. Harvest Gold for the above activity. However, the process of conversion of plastic polythene rolls and plastic polythene bags inter-alia involves cutting, stitching etc. and almost six steps recorded in the Order-in- Original, as below: (i) Receipt of Polythene Rolls/Ink/other job work materials from M/s. Harvest Gold Industries Pvt. Ltd. and M/s. Ready Roti India Pvt. Ltd. on their challans or on bills of suppliers, as consignee. (ii) Putting the Polythene Rolls into Poly Bag Machine. (iii) Printing of MRP on the Polythene Rolls. (iv) Moulding of Polythene Rolls into the shape of Polythene Bags. (v) Cutting and Sealing of the Polythene Bags through hearing process. (vi) Packing of Polythene Bags for dispatch. 1.1 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Hon'ble Supreme Court in the case of M/s. Servo-Med Industries Pvt. Ltd. Vs. Commissioner of Central Excise, reported as 2015 (319) ELT 578 (SC)is relied upon. Earlier decision of Hon'ble Supreme Court in the case of Union of India Vs. Delhi Cloth & General Mills reported at 1977 (1) ELT 199 (SC) and Commissioner of Central Excise, New Delhi-1 Vs. S.R. Tissues Pvt. Ltd. reported as 2005 (186) ELT 385 (SC) have also been relied upon. In light of these decisions relied upon, learned counsel submitted that the process of cutting and slitting polythene rolls undertaken by the appellant does not amout to 'manufacture'. Marketability is mentioned to be another essential ingredient in order to be dutiable. Learned Counsel has submitted that since the polythene bags were not otherwise marketable in the open market which were specifically made to suit the requirements of the principal manufacturers. 3.1 Further, polythene rolls provided to the appellant to prepare the polythene bags were pre-printed. Thus, the polythene bags cannot be sold in the open market and do not have a commercial identity. The decision in the case of Union of India Vs. Sonic Electrochem (P) Ltd. reported as (200....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Pvt Ltd. (supra), as relied upon by the appellant also, mentioned that the said decision has clearly guided the specific yardstick to be applied while discussion the concept of manufacture and creating a distinction between concept of manufacture and marketability. Though it is held in this case that each process may lead to a change in the goods, but every change does not amount to manufacture. However, simultaneously it has been held that there must be transformation by which something new and different comes into being, that is, there must now emerge and article which as a distinctive name, character or use. The process shall be called as manufacture. 4.1 It is further submitted that there is a clear element of marketability on the plastic bags being produced. Although the bags bear the name of principal manufacturer, but this does not take away the fact that the bags are marketable without undergoing any further processing. Finally justifying the invocation of extended period of limitation and reiterating the findings arrived at by adjudicating authority below, the appeal is prayed to be dismissed. 5. Having heard both the parties and perusing the entire records. The onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es commercial commodities and can be sold and used as such." 5.4 Hon'ble Apex Court in the case of M/s. Servo-Med Industries Pvt. Ltd. (supra)has held: "9. A duty of excise is levied on the manufacture of excisable goods. "Excisable goods" are those goods which are included in the schedules of the Central Excise Tariff Act, 1985. "Excisable goods" brings in the concept of goods that are marketable, that is goods capable of being sold in the market. On the other hand, manufacture is distinct from sale-ability. Manufacture takes place on the application of one or more processes. Each process may lead to a change in the goods, but every change does not amount to manufacture. There must be something more - there must be a transformation by which something new and different comes into being, that is, there must now emerge an article which has a distinctive name, character or use." 5.5 In the case of Brakes India Ltd. Vs. Suptd. of Central Excise & Others reported as (1997) 10 SCC 717, this court has very aptly brought out the test of character or end-use by observing as follows: "If by a process, a change is effected in a product, which was not there previously, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... said process. (3) Where the goods are transformed into something different and/or new after a particular process, but the said goods are not marketable. Examples within this group are the Brakes India case and cases where the transformation of goods having a shelf life which is of extremely small duration. In these cases also no manufacture of goods takes place. (4) Where the goods are transformed into goods which are different and/or new after a particular process, such goods being marketable as such. It is in this category that manufacture of goods can be said to take place. 5.8 In the present case show cause notice has recorded the process adopted by the appellant for converting the polythene rolls into polythene bags as below: (i) Receipt of Polythene Rolls/Ink/other job work materials from M/s. Harvest Gold Industries Pvt. Ltd. and M/s. Ready Roti India Pvt. Ltd. on their challans or on bills of suppliers, as consignee. (ii) Putting the Polythene Rolls into Poly Bag Machine. (iii) Printing of MRP on the Polythene Rolls. (iv) Shaping of polythene rolls into the shape of polythene bags (i.e., primarily a packing material)....