Concept of Manufacture under Manufacture :
The term “manufacture” literally means to make by hand. However, in the context of today‘s mechanised world, the term includes making articles by machines also.
However, as far as central excise is concerned the term has a specific definition in the Central Excise Act, 1944 which is contained in Section 2(f) of the Act. It defines manufacture in an inclusive manner as follows:
| “Manufacture includes any process,
(i) incidental and ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter Notes of the Schedule of the Central Excise Tariff Act, 1985 as amounting to manufacture; or (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-Iabelling 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 term manufacturer 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.” |
ANALYSIS: The definition stipulates that manufacture will include any process which is specified in the Section and Chapter Notes of the Central Excise Tariff as amounting to manufacture. In other words, the concept of deemed manufacture is given legal sanction. Thus, excise duty could be leviable on activities which do not result in the production or manufacture of a new commodity. As already indicated, Parliament has power to levy excise duty on goods manufactured in India. In other words, manufacture or production of goods is a necessary condition for imposition of the levy.
The question therefore arises as to whether Parliament can levy excise duty on activities which do not amount to manufacture or production by means of giving artificial meaning to the terms ‘manufacture‘ and ‘production‘. This has been held to be valid by the Supreme Court in said that resort could be had to Entry 97 of List I to the Constitution. Reference may be also made of the case of Collector v. SD Fine Chemicals Pvt. Ltd. 1995 (75) E.L.T. 49 (S.C.).