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C.C.E. Mumbai-IV v. M/s Fitrite Packers, Mumbai

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 2733 of 2007)Decided 7 Oct 2015
Civil Appeal No. 2733 of 2007
Justice A.K. Sikri · Justice Rohinton Fali Nariman

Background

The assessee bought duty-paid galvanised (GI) wrapping paper and printed it, in jumbo rolls, with customers' logos and product names for use as packaging for a specific branded product. The excise department treated this printing as manufacture and demanded duty, but the Tribunal held that printing was only incidental because the paper was still used for wrapping. The Revenue appealed, and the only question left for the Supreme Court was whether the printing amounted to manufacture.

Decision Breakdown

The Court applied its recent decision in Servo-Med Industries (2015) and the four-category test in it, under which a process is manufacture when it creates a different and marketable product with a new character or use. The Court accepted that the basic wrapping purpose did not change, but found that printing a particular brand's logo and product name confined the paper's use to that one product, so it had become a special wrapping paper with a use it did not have before. On that basis the Court held that printing amounted to manufacture, set aside the Tribunal's order, restored the original adjudicating order, and allowed the Revenue's appeal. The classification question had already been decided against the assessee and was not in dispute.

Lesson Learnt

A change to an existing product can count as "manufacture" for tax purposes if it gives the product a new, specific use, even when its general function stays the same. Businesses doing customised processing should check whether their work creates a tax liability.

Official source (sci.gov.in)View Judgment (PDF)

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