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2026 Supreme(Online)(CESTAT) 2471
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH – COURT NO. – IV
Rachna Gupta, Judicial Member, Hemambika R. Priya, Technical Member
BIMBO BAKERIES INDIA PRIVATE LIMITED – Appellant
Versus
PRINCIPAL COMMISSIONER OF CGST-ALWAR – Respondent
Excise Appeal No. 51550 of 2022
For the Appellants/Petitioners: Priyamwada Sinha
For the Respondents: Unmesh Kumar
The conversion of polythene rolls into polythene bags constitutes 'manufacture' under Section 2(f) of the Central Excise Act, 1944, as it results in a new and distinct commercial commodity with a different name, character, and use, regardless of whether it is performed as job work.
Headnote:The dispute centers on whether the conversion of pre-printed polythene rolls into polythene bags, as defined under Section 2(f) of the Central Excise Act, 1944, constitutes 'manufacture' or 'job work service'. The appellant, a subsidiary company, converted rolls provided by its parent companies into bags through a six-step process including printing, moulding, cutting, and sealing. The department alleged that this process created a new commercial commodity liable for Central Excise Duty, whereas the appellant contended it was a job work service for which service tax had already been paid. The court framed the issue as whether the conversion of polythene sheets into bags amounts to manufacture or job work service. Applying the 'character or use' test and the 'commercial commodity' test, the court reasoned that the process transformed the rolls into a distinct product with a different name, character, and use. The court held that the presence of a logo does not negate the fact that a new marketable product emerged, thus fitting the definition of manufacture under Section 2(f). Consequent thereto, the appeal is hereby dismissed.
| Table of Content |
|---|
| 1. background of the dispute and the specific six-step conversion process of polythene rolls into bags. (Para 1 , 2) |
| 2. competing arguments on whether the activity constitutes job work (service tax) or manufacture (excise duty). (Para 3 , 4) |
| 3. application of the 'character or use' and 'commercial commodity' tests to determine manufacture under section 2(f). (Para 5) |
| 4. final dismissal of the appeal and upholding of the original order. (Para 6) |
FINAL ORDER NO. 51137/2026
DR. RACHNA GUPTA
M/s. Bimbo Bakeries India Private Limited, earlier known as M/s. Freshpack Industries Pvt. Ltd., the appellant herein is the subsidiary company of M/s. Ready Roti India Pvt. Ltd. (hereinafter referred as RRIPL) and M/s. Harvest Gold Industries Pvt. Ltd (herein after referred as Harvest Gold). M/s. RRIPL and M/s. Harvest Gold are engaged in manufacturing of bread and bakery items. For the purpose they were procured the raw material i.e. maida and atta from various vendors like M/s. Alwar Roller Flour Mills Pvt. Ltd. and M/s. Delhi Flour Mills Co. Ltd. etc. They were also procuring packaging materials i.e. polythene from various vendors and were supplying the same to the subsidiary company namely M/s.
Freshpack Industries Pvt. Ltd. for converting plastic polythene rolls into plastic polythene bags.
During the course of investigation, the department noticed that M/s. Freshpack was paying service tax on conversion charges received from M/s. Ready Roti and from M/s. Harvest Gold for the above activity. However, the process of conversion of plastic polythene rolls and plastic polythene bags inter-alia involves cutting, stitching etc. and almost six steps recorded in the Order-in-Original, as below:
(i) Receipt of Polythene Rolls/Ink/other job work materials from M/s. Harvest Gold Industries Pvt. Ltd. and M/s. Ready Roti India Pvt. Ltd. on their challans or on bills of suppliers, as consignee.
(ii) Putting the Polythene Rolls into Poly Bag Machine.
(iii) Printing of MRP on the Polythene Rolls.
(iv) Moulding of Polythene Rolls into the shape of Polythene Bags.
(v) Cutting and Sealing of the Polythene Bags through hearing process.
(vi) Packing of Polythene Bags for dispatch.
1.1 Department formed an opinion that the activity of the appellant is not in the nature of Job Work Services but it amounts to manufacture ofPlastic Polythene Bags in terms of Section 2(f) of Central Excise Act, 1944. Though the bread and bakery manufactured by M/s. Ready Roti and M/s. Harvest Gold were exempted from Central Excise Duty but the plastic polythene bags manufactured by the appellant were alleged to be liable to Central
Excise Duty being dutiable at the time of their clearance in the hand of M/s. Freshpack. The waste/scrap generated during the conversion process was returned by the appellant to M/s. Ready Roti and M/s. Harvest Gold which were sold by both the said companies. With these observations, a showcase notice bearing No. 240/2018-19/5181 dated 09.10.2019 was served upon the appellants. The demand was proposed of central excise duty of Rs.3,53,80,387/- with respect to polythene bags manufactured and cleared by the appellants to M/s. Ready Roti and M/s. Harvest Gold during November 2014 to June 2017, along with interest at the appropriate rates and the penalties under Section 11AC(1)(c) of Central Excise Act, 1944. The extended period was invoked while issuing the show cause notice that the proposed amount of excise duty has been evaded willfully by suppressing facts and intentionally contravening provisions of Central Excise Act, 1944 as well as Central Excise Rules, 2002. The said proposal has been confirmed vide Order-in-Original No. 032-21322 dated 25.10.2021. Being aggrieved, the appellant is before this Tribunal.
2. We have heard Ms. Priyamwada Sinha, learned Advocate for the appellant and Shri Unmesh Kumar, learned Authorized Representative for the department.
3. Learned counsel for the appellant has submitted that the appellant was registered
