M/S. KORES INDIA LTD., CHENNAI versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI

Citation: [2004] SUPP. 6 S.C.R. 320 · Decided: 23-11-2004 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off

Judgment (excerpt)

A 
B 
c 
MIS. KORES INDIA LTD., CHENNAI 
v. 
COMMISSIONER OF CENTRAL EXCISE, CHENNAI 
NOVEMBER 23, 2004 
[ARIJIT PASAYAT AND C.K. THAKKER, JJ.] 
Central Excise and Salt Act, 1944-Section I IA proviso-Central 
Excise Rules, 1944-Rule 9(2)-Assessee engaged in cutting of typewriter/ 
telex ribbons into standard pre-determined lengths-Levy of excise duty 
invoking period of limitation-Case of assessee that cutting of jumbo rolls 
into smaller size does not amount to manufacturing process and bonafide 
belief of non-exciseability-Correctness of-Held : Process of producing 
ribbons in spools out of jumbo rolls results in producing commercially 
distinct and identifiable article having distinct name, function and use and 
D has separate market-A/so assessee has a separate unit, machinery and 
workforce to manufacture in spool form-Thus, the process is a manufacturing 
process-Further, .from facts it is clear that· there was suppression of fact 
refuting to manufacture and removal of goods with the intent to evade 
payment of duty, thus, extended period of limitation invokable under Rule 
E 
F 
9(2) read with proviso to Section I I A for demand duty-Order of Collector 
as upheld by tribunal does not call for interference. 
Words and Phrases : 
'Manufacture'-Meaning of 
Appellant-assessee's factory is engaged in a process whereby 
typewriter/telex ribbons are cut into standard pre-determined lengths. 
Collector of Excise levied duty on typewriter ribbons cleared by the 
assessee during certain period holding the transaction as a manufacturing 
process by invoking extended period of limitation under proviso to 
G section llA of the Central Excise and Salt Act, 1944. It was assessees' 
case that since appropriate duty had been levied on jumbo roles received 
by them from two small scale units, duty could not be levied again; and 
that apart from cutting of ribbons into standard pre·determined lengths, 
the assessee did not take any activity on the ribbons received. Tribunal 
H held that the cutting of ribbons in smaller size and spooling them into 
320 
MIS. KORES INDIA LTD. CHENNAI v. C.C.E., CHENNAI 
321 
on the automatic spooling machines amounts to manufacture and as A 
such duty is payable on typewriter/telex ribbons; and that as there was 
clear contravention of Rule 9(1) with the intention to evade, extended 
period of limitation was applicable. In the connected appeals it was held 
the transaction was not a manufacturing process and as such the duty 
was not payable. Hence, the present appeals. 
B 
Appellant - assessee contended that cutting the jumbo rolls into 
smaller size may amount to processing but does not amount to 
manufacturing; that the product was not subject to levy of excise duty; 
and that the extended period of limitation is not applicable because to 
infer suppression of facts the Revenue had to establish something more 
than mere bonafide mistake. 
c 
Respondent - Excise Department contended that manufacturing 
activity is involved by which a different commercial commodity has 
come into existence, having a new name and character; and that with D 
clear knowledge that the process involved manufacture, the activity was 
undertaken and, as such it is the legal duty of the assessee to take out 
the licence and pay duty; and the same being deliberately avoided with 
malafide intention, it was clear case of suppression of facts attracting 
extended period of limitation. 
E 
Disposing of the appeals, the Court 
HELD : 1. In the instant case, assessee submitted that ribbon in 
rolls of 210 mtrs, and above in length are purchased from two small 
scale units. The said Jumbo rolls were fed into cutting and splitting 
machines in their premises and ribbons of standard lengths of 10 mtrs. 
and 5 mtrs. were cut/slit and subsequently wound/spooled on the metal 
spools and 10 such spools are blister packed and sealed with aluminium 
F 
G 
foil. It was categorically observed that the assessee produced ribbons in 
spools out of Jumbo rolls and the resultant product is a distinct, 
identifiable article having distinct name, function and use. The resultant 
product is also commercially distinct as understood in commercial 
parlance and has a separate market. Both products are not inter-
changeable. Once the Jumbo rolls are cut into smaller sizes, they 
completely lost their earlier identity and cannot be used for the same H 
322 
SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R. 
A purpose as was done before cutting. The ribbo

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