2005 (12) TMI 3 - SC - Central Excise

Whether printing/ decorating of duty paid plain glazed ceramic tiles amounts to manufacture or not in terms of Section 2(f) of the Central Excise Act, 1944? Held that - There must be transformation and a new article must result, having a distinct name, character or use. These conditions are not satisfied in the instant case because ceramic glazed tiles remain ceramic glazed wall tiles even after process of printing and decorating. Persons dealing in this commodity recognize the same as wall tiles before and after printing and decorating Transformation of product must be such that it becomes commercially different commodity to attract central excise duty unless a new and distinct article known commercially to the market emerges the process will not amount to manufacture. In the present case no distinct comodity comes into being as a result of process carried out by the respondent. Thus the decorated glazed ceramic wall tiles after their decoration did not change their basic character viz., glazed tiles and there fore did not undergo a process of manufacture. Against assessee.

Summary

Issues:
- Appeal filed by the Commissioner of Central Excise and Customs under Section 35 (L) (b) of the Central Excise and Salt Act, 1944 against the judgment of the Tribunal.
- Determination of whether the activities of processing glazed tiles into decorated ceramic glazed wall tiles amount to 'manufacture' under Section 2(f) of the Central Excise Act, 1944.

Analysis:
1. The appeal was filed by the Commissioner of Central Excise and Customs against the judgment of the Tribunal, which set aside the Commissioner's order and allowed the appeal filed by the respondent, a company engaged in processing glazed tiles into decorated ceramic glazed wall tiles. The Tribunal concluded that the process did not result in the creation of a new and distinct commodity, relying on a previous judgment regarding the definition of 'manufacture.'

2. The Tribunal considered whether the processing of plain glazed tiles into decorated ceramic glazed wall tiles constituted 'manufacture' under the Central Excise Act, 1944. The respondent argued that their process involved two types: screen printing tiles and decorating glazed tiles with glass fritz. The Tribunal, referencing a previous court ruling, emphasized that for a process to be considered 'manufacture,' it must result in a new commercially recognized product. In this case, the Tribunal found that the glazed tiles retained their identity even after decoration, thus not meeting the criteria for 'manufacture.'

3. The court further elaborated on the concept of 'manufacture,' stating that every change in an article is not necessarily 'manufacture.' To qualify as 'manufacture,' there must be a transformation resulting in a new article with a distinct name, character, or use. In this instance, the decorated glazed ceramic wall tiles did not undergo a significant transformation and remained recognizable as glazed tiles both before and after decoration. The court emphasized that unless a new and distinct commercially recognized article emerges from the process, it does not amount to 'manufacture.'

4. Ultimately, the court upheld the Tribunal's decision, stating that the decorated glazed ceramic wall tiles did not undergo a change in their basic character and therefore did not qualify as a product of 'manufacture.' The court found no fault in the Tribunal's judgment, citing a previous case that supported the conclusion reached. The appeal was dismissed with no order as to costs, affirming that the process in question did not result in the creation of a new and distinct commodity.