Law: Central Excise Act, (I of 1944)

Section: 2

(Central Excises Act (I of 1944)]......S 2(25)---Manufacture---Ingredients---In order to bring an article within the framework of word "manufacture" such article must change the shape emerged as a new product be identifiable and commercially marketable and be an altogether different product. Civil and Military Press Ltd. v. Pakistan 1985 CLC 1021; Municipal Council, Domoh v. Vrajlal Manilal & Co. AIR 1982 SC 844; Union of India v. Delhi Cloth and General Mills AIR 1963 SC 79; Words and Phrases, Vol. 26 and Mewa Lal v. Tara Ram AIR 1973 All. 165 rel. (b) Central Excises Act (I of 1944)--S. 2(25)---Manufacture---Conversion of tea and filter paper into tea bags in a continuous process---Levy of excise duty---Validity--­Treatment of tea bag/paper bag as an act of "manufacture" was wrong as in fact no independent product ever came into existence from the process of inserting the paper with the blended tea which in fact was a necessary act to use the paper pouches---Intervening act never assumed the status of manufacture---Demand of duty on paper bags used in the packing of tea as a result of a continuous process was not justified--­Appeal was allowed and order was set aside by the Appellate Tribunal. Collector of Customs v. Abdul Majid Khan and others 1977 SCMR 371; Messrs Ilirjina & Co. (Pakistan) Ltd. v. Commissioner of Sales Tax, Central Karachi 1971 SCMR 128; Muhammad Ali v. State Bank of Pakistan, Karachi 1973 SCMR 140 and Madina Ghee Mills (Pvt.) Ltd. v. The Collector of Customs Adjudication, Faisalabad (2002) 85 Tax 263 ref. ORDER This appeal has been filed against the order, dated 31-8-2002, passed by the Collector of Sales Tax Adjudication, Karachi-III. 2. The case of the appellant is that the tea and filter paper used by the appellant in a continuous process for converting the same into tea bags is exempt from excise duty, and that the process by which filter paper is converted by the appellant into a tea bags does not fall within the definition of manufacture as defined under subsection 25 of section 2. of the Central Excises Act, 1944, and that the tea bag is not a vendable commodity and as such the same is not subject to payment of excise duty.…

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