Taxing issue - Does any fingering with a product make it "deemed manufacture"

Sorry for the corny heading!!


Excise duty is on “manufacture”. The term “manufacture” is defined in Section 2 (f) of the Central Excise Act, 1944. "Manufacture” includes any process which is incidental or ancillary to the completion of the manufactured product. Further, certain processes which could not be generally construed as “manufacture”, are also specifically deemed to be “manufacture”, by way of Section / Chapter notes of the Central Excise Tariff Act, 1985 and as per sub-section 2 (f) (iii) in respect of the goods specified in the Third Schedule to the Central Excise Act, 1944.

Incase, for an activity that seems not really a manufacturing activity, like packing, labeling, relabelling etc, its is important to first ascertain if this activity has been specifically covered in the Section note, chapter note relating to the tariff entry of the product that is being (fingered... ha ha...) re-labeled, packed from bulk packs to retail packs... etc... if the chapter/section note doesnot expressly state these activities amounting to manufacture... then you can take it that they are not manufacturing activities for excise purposes... however it the section/chapter notes does say so... then ... I am afraid to say... these would deemed to be manufacture.... through a deeming fiction brought in by the Section, Chapter note.


PS: Also be sure to check Third Schedule of the excise tariff.

Definition of manufacture as in clause iii of section 2(f), specifically includes process like packing, labelling, re-labelling, declaration, alteration of retail sale price, as amounting to manufacture, for products (tariff headings) listed in Third schedule .

Shyam Oil Cake & SR Tissues (goods cases on this subject)