1980 (7) TMI 103 - HC - Central Excise

Manufacture - Process of drilling holes, trimmings and chamferring of brake linings - Liability to duty

Summary

Issues:
- Whether the petitioner is required to obtain a license under the Central Excises and Salt Act for marketing brake linings under a specific name.
- Whether the petitioner is obligated to pay central excise duty on the brake linings sold by them.

Analysis:
1. The petitioners, a brake equipment manufacturer, procure brake linings blanks from various manufacturers and customize them for specific vehicle requirements. The dispute revolves around whether this customization process constitutes 'manufacture' under the Central Excises and Salt Act, necessitating a license and excise duty payment.

2. The respondents argue that the petitioners are manufacturing brake linings, hence must obtain an L-4 license and pay excise duty. Conversely, the petitioners contend that they do not manufacture brake linings but only customize blanks purchased from manufacturers. They assert that the customization process does not amount to 'manufacture' under the Act, thus absolving them from licensing and duty obligations.

3. The definition of 'manufacture' under Section 2(f) of the Act includes any process incidental to completing a manufactured product. The courts have interpreted this definition in previous cases like Extrusion Process Ltd. v. N.R. Jadhav and Metro Readywear Co. v. Collector of Customs to determine the scope of 'manufacture' concerning incidental processes.

4. The court determines that the customization process carried out by the petitioners, i.e., drilling, trimming, and chamfering the brake lining blanks, is essential to make the product usable in vehicles. As this process is incidental to completing the brake linings as a manufactured product, the petitioners are deemed to be manufacturing brake linings, requiring a license and excise duty payment as per the Act.

5. The contention of double taxation raised by the petitioners is dismissed, clarifying that they are only liable for the differential duty after considering the duty already paid on the brake lining blanks. The court upholds the respondents' position, ruling against the petitioners and dismissing the writ petition without costs.