Per P.S. Bajaj :

This appeal has been preferred by the Revenue against the impugned order in appeal dated 11.10.99 passed by the Commissioner (Appeals) vide which he had reversed the order in original dated 4.12.97 confirming the duty demand of Rs. 85,771/- and imposing penalty of Rs. 2000/- on the respondents.

2. The facts giving rise to this appeal may briefly be stated as under :-

3. The respondents are engaged in the manufacture of sewing thread. They were also found to had manufactured wax washers from the duty paid paraffin wax procured from the market in their premises valued at Rs. 4,86,286.27 during the period October 1992 to February 1994 falling under sub-heading 9602.00 of the CETA and captively used the same without payment of excise duty amounting to Rs. 85,771/-. They were accordingly served with a show cause notice dated 13.10.95 vide which they were called upon to pay the duty amount and penalty was also proposed to be imposed on them. They, however, contested the correctness of that notice by alleging that they only melted the duty paid paraffin wax after purchasing from the market and put the same in the moulds to prepare washers for using in the winding machine for waxing the sewing thread and as such no process of manufacture was involved therein. They denied their liability to pay the duty on the wax washers. The Assistant Commissioner, however, did not agree with their version and confirmed the duty demand of Rs. 85,771/- and also imposed penalty of Rs. 2000/- on them through the order in original dated 4.12.97. This order of the Assistant Commissioner had been reversed by the Commissioner (Appeals) when challenged before him in appeal by the respondents through the impugned order in appeal on the grounds that preparation of wax washers by melting the duty paid paraffin wax with the help of moulds did not amount to manufacture of any new product by the respondents and that the duty demand was also time barred.

4. The Revenue has come up in appeal against the impugned order in appeal of the Commissioner (Appeals).

5. We have heard both the sides.

6. The facts are not much in dispute. The respondents are manufacturers of sewing thread. The wax washers are being used by them for waxing that thread. The process of preparing the wax washers adopted by them is also not in dispute. The duty paid paraffin wax in lump form is procured by them from the market and thereafter the same is melted and put in the moulds so as to get the shape of wax washers and those wax washers are then used in the winding machines for waxing the sewing thread. The Assistant Commissioner took the view that it was a process of manufacture as a new and distinct article emerged therefrom. The Commissioner (Appeals) did not accept this view of the Assistant Commissioner on the ground that mere melting of the lump form of the wax and putting the same in the moulds to change that form in order to use in the winding machines for waxing the sewing thread, did not amount to manufacture.

7. The sole issue thus involved is as to whether the process adopted by the respondents of melting lump form of the wax purchased from the market and putting the same in the moulds to prepare wax washers for using in the winding machine for waxing the sewing thread, could be called a manufacturing process or not.

"`Manufacture' is a term which as a noun signifies the production of articles for use from raw or prepared materials by giving these materials new forms, qualities, properties or combinations, whether by hand labour or by machinery. In short, `manufacture' is a process of converting same materials into a different from adopted to uses to which in its original form it could not be so readily applied. As a very `manufacture' means to make, to invent, to fabricate or to produce an article by the hand, by machinery or by other agency. To manufacture is to produce something new out of the existing materials."

8. In Union of India Vs. J.G. Glass Industries Ltd.,