2003 (9) TMI 81 - SC - Central Excise

Whether the cutting of marble blocks into marble slabs amounts to manufacture for the purpose of the Central Excise Act - Held that - Following decision of Rajasthan State Electricity Board v. Associated Stone Industries and Anr 2000 (5) TMI 1061 - SUPREME COURT - activity carried on by the appellant does not amount to manufacture - Decided in favour of assessee.

Summary

Issues:
Whether cutting marble blocks into marble slabs amounts to manufacture for the purpose of the Central Excise Act.

Analysis:
The main issue in this case was whether the cutting of marble blocks into marble slabs would be considered as manufacturing under the Central Excise Act. The Tribunal, in a majority decision, initially categorized the commodity under a specific Tariff entry but remitted the matter to the assessing authority for further examination. The appellant argued that the activity of cutting blocks into slabs did not constitute manufacturing as it did not create a new distinct commodity. The appellant contended that even after cutting, the marble would still be marble and thus should not be subject to tax. On the other hand, the department's counsel asserted that applying processes to make a commodity marketable amounts to manufacturing under the Central Excise Act.

In a related case, the Supreme Court had previously considered a similar issue in Rajasthan State Electricity Board v. Associated Stone Industries and Anr. The Court held that the mere cutting and polishing of stones into slabs did not amount to manufacturing goods. The Court emphasized that manufacturing involves bringing into existence a new and different article with a distinctive name, character, or use after undergoing transformation. Since the end product remained stone and did not create a new commercial product, the Court concluded that cutting and polishing stones did not constitute manufacturing.

Based on the precedent set by the previous decision, the Supreme Court in this case ruled that the activity of cutting marble blocks into slabs did not amount to manufacturing. The Court set aside the Tribunal's order and allowed the appeal, affirming that the appellant's activity did not meet the criteria for manufacturing under the Central Excise Act.