2007 (5) TMI 7 - AT - Central Excise

Manufacture Alleged that appellant activity of slitting jumbo rolls into smaller rolls amount to manufacture so as to result goods liable to excise duty Held that mere cutting of jumbo rolls into smaller rolles does not amount to manufacture

Summary

Issues involved:
Whether slitting and cutting of duty paid plastic laminated films into smaller rolls amounts to manufacture resulting in goods liable to excise duty.

Analysis:
The judgment delves into the issue of whether the activity of slitting jumbo rolls of plastic laminated films into smaller rolls constitutes 'manufacture' for the purpose of excise duty liability. The assessee received duty paid laminated films on jumbo rolls, rewound them on a machine, and slit them into smaller widths. The Tribunal considered the Supreme Court's decision in a similar case involving tissue paper and concluded that the characteristics of the laminated films remained the same even after slitting, indicating no new distinct commodity emerged. The judgment emphasizes that for an activity to amount to manufacture, there must be a change resulting in a product with a different character and use. The Court applied the test of character or end-use to determine whether a new product had emerged from the slitting process.

The judgment also discusses the application of previous legal precedents to the current case. It distinguishes the facts of this case from other judgments where the process of cutting or slitting resulted in distinct commodities. For instance, the Court differentiated the present case from a case involving the production of typewriter ribbons, where a new product with a distinct use emerged from the process. Additionally, the judgment highlights that the mere classification of raw material and finished product under different headings does not automatically imply manufacturing. The Court emphasized that the process must result in a new product with different characteristics to be considered as 'manufacture' for excise duty purposes.

Moreover, the judgment refers to a Delhi High Court case where the court held that cutting or slitting of steel sheets did not amount to manufacture as no distinct article with a different name, character, and use was created. The Tribunal relied on these legal principles and the Supreme Court's decision in a similar matter to conclude that the slitting activity undertaken by the assessee did not amount to manufacture. As a result, the Tribunal answered the reference by holding that the process of slitting jumbo rolls of laminated films into smaller rolls did not constitute manufacture, thereby determining that the goods were not liable to excise duty.

In conclusion, the judgment provides a detailed analysis of the legal principles surrounding the concept of 'manufacture' in the context of slitting and cutting activities. By referencing relevant legal precedents and applying tests to determine the emergence of a new product with distinct characteristics, the Tribunal concluded that the slitting process in this case did not result in the creation of goods liable to excise duty.