The Central Excise Act, 1944
In this Act, unless there is anything repugnant in the subject or context, –
1[(a) “adjudicating authority” means any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), 2[Commissioner of Central Excise (Appeals)] or Appellate Tribunal;]
3[(aa) “Appellate Tribunal” means the Customs, Excise and 4[Service Tax] Appellate Tribunal constituted under section 129 of the Customs Act, 1962 (52 of 1962);]
5[(aaa)] “broker” or “commission agent” means a person who in the ordinary course of business makes contracts for the sale or purchase of excisable goods for others;
6[(b)] “Central Excise Officer” means the Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, 7[Joint Commissioner of Central Excise,] Deputy Commissioner of Central Excise, Assistant Commissioner of Central Excise or any other officer of the Central Excise Department, or any person (including an officer of the State Government) invested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) with any of the powers of a Central Excise Officer under this Act;
(c) “curing” includes wilting, drying, fermenting and any process for rendering an unmanufactured product fit for marketing or manufacture;
(d) “excisable goods” means goods specified in 8[the First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986)] as being subject to a duty of excise and includes salt;
(e) “factory” means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on;
9[(ee) “fund” means the Consumer Welfare Fund established under section 12C];
10[(f) “manufacture” includes any process —
(i) incidental or ancillary to the completion of a manufactured product;
(ii) which is specified in relation to any goods in the section or Chapter notes of 11[The First Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to 12[manufacture; or]
13[(iii) which in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer;]
And the word “manufacture” shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;
14(ff) “National Tax Tribunal” means the National Tax Tribunal established under section 3 of the National Tax Tribunal Act, 2005 (49 of 2005);]
(g) “prescribed” means prescribed by rules made under this Act;
(h) “sale” and “purchase”, with their grammatical variations and cognate expressions, mean any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration;
(k) “wholesale dealer” means a person who buys or sells excisable goods wholesale for the purpose of trade or manufacture, and includes a broker or commission agent who, in addition to making contracts for the sale or purchase of excisable goods for others, stocks such goods belonging to others as an agent for the purpose of sale.
‘Goods’ meaning of
The mudguns and the hydraulic drilling machines which are created and installed at the site and could not be shifted from one place to another without dismantling and re-creating it cannot be described as “goods” within the meaning of Excise Act and exigible to excise duty; T.T.G. Industries Ltd., Madras v. Collector of Central Excise, Raipur, (2004) 4 SCC 751.
For the purposes of the Act, “Goods” would refer to an article which would ordinarily come to the market to be bought and sold; South Bihar Sugar Mills Limited v. Union of India, 1977 ELT J 199 (SC): 1977 (2) SCJ 433.
Imposition of excise duty
The mere coverage that an item falls in a tarrif entry is not sufficient to impose excise duty on it. There must be manufacture and marketability of the product and the burden to prove that there was manufacture and what was manufactured, was on the Revenue. Otherwise duty levied on it again, would amount to levying double duty on the same product; Commissioner of Central Excise, Chandigarh-I v. Markfed Vanaspati & Allied Industries, (2003) 4 SCC 184.
Manufacture: burden of proof
It cannot be said that merely because an item falls in a tariff it must be deemed that there is manufacture. The law still remains that the burden to prove that there is manufacture and that what is manufactured is on the revenue, Lal Woollen & Silk Mills Ltd. v. Collector, AIR 1999 SCW 1436.
Manufacture: meaning of
After processing, lead and aluminium sheets are converted into electrodes which is new product known in the market with a distinct name, character and use amounts to manufacture; Commissioner of Central Excise, Jaipur v. Hindustan Zinc Ltd., (2004) 4 SCC 455.
Printing on bottles does not amount to ‘manufacture’ within the meaning of section 2(f); Union of India v. J.G. Glass Industries Ltd., (1998) 2 scc 32.
Section 2(f) of the Act does not define the expression “manufacturer” but only lays down an inclusive definition. Therefore, the word “manufacture” for the purposes of Central Excise has to be construed in its natural and plain meaning but it shall also include any process incidental or ancillary to the completion of a manufactured product; Metal Forgings Pvt. Ltd. v. Union of India, 1987 (32) ELT 15 (Del).
The word “manufacture” means to bring into existence a new substance and does not mean merely to produce some change in a substance. It is true that etymological word “manufacture” properly construed would doubtless cover the transformation but the question is whether that transformation brings about fundamental change, a new substance is brought into existence or a new different article having distinctive name, character or use results from a particular process or a particular activity; Collector of Central Excise v. Kiran Spinning Mills, (1988) 2 SCJ 140.
Where manufacture involves series of processes and if any one of such processes is carried on with the aid of power, the case is taken out of the purview of the notification; Collector of Central Excise, Jaipur v. Rajasthan State Chemical Works, Deedwana, Rajasthan, (1992) 1 SCJ 325.
Making a paper-making machine by assembling various components has been held that what has been produced is something quite different from the components that had been purchased for making a paper-making machine. A new marketable commodity has emerged as a result of the manufacturing activity. It amounts to manufacture; Sirpur Paper Mills Ltd. v. Collector of Central Excise, Hyderabad, (1998) 1 scc 400.
1. Ins. by Act 44 of 1980, sec. 50 and Sch. V (w.e.f. 11-10-1982).
2. Subs. by Act 22 of 1995, sec. 70, for “Collector of Central Excise (Appeals)” (w.e.f. 26-5-1995).
3. Ins. by Act 44 of 1980, sec. 50 and Sch. V (w.e.f. 11-10-1982).
4. Subs. by Act 32 of 2003, sec. 135, for “Gold (Control)” (w.e.f 14-5-2003).
5. Clause (a) relettered as clause (aaa) by Act 44 of 1980, sec. 50 and Sch. V (w.e.f. 11-10-1982).
6. Subs. by Act 22 of 1995, sec. 71, for clause (b) (w.e.f. 26-5-1995).
7. Ins. by Act 27 of 1999, sec. 120 (w.e.f. 11-5-1999).
8. Subs. by Act 27 of 1999, sec. 119, for “the Schedule” (w.e.f. 11-5-1999). Earlier they were substituted by Act 5 of 1986, sec. 4, for “the First Schedule” (w.e.f. 28-2-1986).
9. Clause (ee) ins. by Act 40 of 1991, sec. 2 (w.e.f. 20-9-1991). Earlier clause (ee) was inserted by Act 25 of 1950, sec. 11 ans Sch. IV and was omitted by Act 41 of 1954, sec. 2 and Sch. (w.e.f. 8-10-1954).
10. Subs. by Act 5 of 1986, sec. 4, for clause (f) (w.e.f. 28-2-1986).
11. Subs. by Act 27 of 1999, sec. 120, for “the Schedule” (w.e.f. 11-5-1999).
12. Subs. by Act 20 of 2002, sec. 132, for “manufacture” (w.e.f. 11-5-2002).
13. Subs. by Act 32 of 2003, sec. 135, for sub-clause (iii) (w.e.f. 14-5-2003). Earlier sub-clause (iii) was inserted by Act 20 of 2002, sec. 132 (w.e.f. 11-5-2002).
14. Ins. by the Act 49 of 2005, sec. 30 and Sch., Pt. VII-1 (w.e.f. 28-12-2005).
15. Clauses (i) and (j) omitted by Act 33 of 1996, sec. 72 (w.e.f. 28-9-1996).
16. Clause (jj) omitted by Act 25 of 1950, sec. 11 and Sch. IV. Earlier clause (jj) was inserted by the A.O. 1950.