Manufacture under the Central Excise Act

Any Taxable event for central excise duty is manufacture or production in India. The word ‘produced’ is broader than ‘manufacture’ and covers articles produced naturally, live products, waste, scrap etc. Manufacture means to make, to inset, to fabricate, or to produce an article by hand, by machinery or by other agency. To manufacture is to produce something new, out of existing materials

• Manufacture’ means :

(a) Manufacture as specified in various Court decisions i.e. new and identifiable product having a
distinctive name, character or use must emerge or
(b) Deemed Manufacture.

• Deemed manufacture is of two types –

(a) CETA specifies some processes as ‘amounting to manufacture’. If any of these processes are carried out, goods will be said to be manufactured, even if as per Court decisions, the process may not amount to ‘manufacture’, [Section 2(f)(ii)].

(b) In respect of goods specified in Third Schedule to Central Excise Act, repacking, re-labelling, putting or altering retail sale price etc. will be ‘manufacture’. The goods included in Third Schedule of Central Excise Act are same as those on which excise duty is payable u/s 4A on basis of MRP printed on the package. [Section 2(f)(iii) w.e.f. 14-5-2003].

Explanation as to what is not Manufacture

Any activity shall not be deemed to be manufacture, only because it has been so written in the licence granted.

The following are not manufacture :
(a) Natural activity, even if carried otherwise, e.g. drying yarn in natural sun;
(b) Processing of duty paid goods;
(c) Purchasing various item and putting into a container and selling them;
(d) Obtaining of natural products;
(e) Testing/quality control of items manufactured by others;
(f) Cutting and polishing of diamond;
(g) Upgradation of computer system;
(h) Printing on glass bottles;
(i) Affixing brand name;
(j) Crushing of boulders into smaller stones.

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