Process of cutting, grooving, and assembling of the aluminium composite panels, for use in structures, does not amount to ‘manufacture’

The Supreme Court has held that process of cutting, grooving and assembling of aluminium composite panels (ACPs) does not amount to ‘manufacture’ under Section 2(f) of the Central Excise Act, 1944. The Apex Court in Alupro Building Systems Pvt. Ltd. v. Commissioner noted the following:

• Two-fold test for manufacture – Transformation and marketability. 
• No goods with distinct characteristics, identity or use came into existence after the process, as goods were merely being adapted for particular use.
• Process does not alter the material properties or the commercial character of the ACPs.
• If goods retain their substantial identity, they would be processed and not manufactured in terms of Section 2(f).
• Test of whether a distinct product has come into existence is not a test of physical transformation alone, it is a collective test - of transformation into a new product.
• Standard of proof for marketability – Courts must either believe it to exist or consider its existence so probable that a reasonable man ought, under the given circumstances, acts upon the supposition that it exists.

The assessee was represented by Lakshmikumaran & Sridharan Attorneys here.