SC Cancels Chhota Rajan's Bail in 2001 Jaya Shetty Murder Case  ||  NCLAT: Workmen Can Claim Dues Post-Layoff If They Worked After Corporate Debtor's Notice Issuance  ||  NCLAT: Debt Can be Proved Through Any Documentary Evidence, No Written Contract Needed.  ||  Madras HC: Railway Authorities Can't Deboard Valid-Ticket Passengers Heading to Protest  ||  Delhi HC: Women’s Entry into Army Corps Can’t be Restricted; Vacant Male Posts Must be Open to Women  ||  Delhi HC: Pressuring Husband to Cut Ties With His Family Amounts to Cruelty; Ground For Divorce  ||  Bombay HC: Magistrate Need Not Pass Preliminary Order U/S 145 CrOC If HC or SC Directs Inquiry  ||  Delhi HC Allows Woman to Terminate 22-Week Pregnancy from False Promise of Marriage  ||  Supreme Court: Reasons Omitted In an Order May be Considered In Specific Circumstances  ||  SC: Execution of Arbitral Award Cannot be Stalled Just Because Section 37 Appeal is Pending    

Union of India v. Delhi Cloth & General Mills - (Supreme Court) (12 Oct 1962)

Raw or refined, market should know difference between goods

MANU/SC/0245/1962

Excise

After the Central government levied excise duty on readymade garments and textile bearing a brand name, and sold with a price tag of over Rs. 1000, it faced a barrage of questions over the term ‘manufacture’. Panicky retailers wondered, if by stitching on to clothing a tag to ‘brand’ the same, they would have ‘manufactured the garment and become liable to excise duty.

Decades ago the Supreme Court itself delved into what ‘manufacture’ actually meant, and how it differed from other operations, say, ‘processing’.

Appeals arose after petitions by three companies manufacturing ‘Vanaspati’ vegetable oil were allowed by the High court, successfully challenging the imposition of excise duty on the ‘manufacture’ of “refined oil” from raw oil.

Tax authorities contended before the Supreme Court that the process of turning raw oil into refined oil required numerous industrial steps. Refined oil had different physical properties as well, being largely colourless and mostly odourless, unlike raw oil which was turbid.

The court observed ‘manufacture’ to be “used a as verb is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some change in a substance", however minor in consequence the change may be.”

It distinguished manufacturing from processing, noting: “if power is used for any of the numerous process that are required to turn the raw material into a finished article known to the market…an argument that power is not used in the whole process of manufacture using the word in its ordinary sense, will not be available. It is only with this limited purpose that the legislature inserted this definition of the word 'manufacture' in the definition section and not with a view to make the mere "processing" of goods as liable to excise duty”.

The appeals were dismissed. Though there was clear distinction between refined and raw oil, that by itself was insufficient to impose excise duty. For duty to be payable, not only must a new good be brought into market, it must also be known to the market.

Relevant : Levy of excise duty on readymade garments MANU/EXCR/0020/2016

Tags : EXCISE   MANUFACTURE   REFINED OIL  

Share :        

Disclaimer | Copyright 2025 - All Rights Reserved