The Supreme Court in the case of M/s Satnam Overseas Ltd. Versus Commissioner of Central Excise, New Delhi, 2015 (318) E.L.T. 538 (S.C.) has held that a process of packing combination of mixture of two or more products, that does not change the essential nature of the product, will not amount to ‘manufacture’.
In the present case, the Appellant is engaged in an activity of packing combination of mixture of raw rice, dehydrated vegetables and spices in the name of ‘Rice and Spice’ and the resultant product needs to be cooked in same manner, according to the cooking instructions mentioned on the pouch and the rice did not lose its essential character.
The Supreme Court held that in the present case, the activity undertaken by the Appellant does not amount to ‘Manufacture’ within the meaning of Section 2(f) of the Central Excise Act, 1944 as the essential characteristics of the product still remains the same and thus there is no question of payment of any Excise Duty.
This judgement clearly lays down that whether a product undergoes a process of treatment, labour and manipulation or a process of chemical change, if the product remained the same at starting and terminal points of the process and no distinctive product comes into existence, then the process undertaken will not amount to manufacture for the purpose of levy of Excise Duty.
Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM
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