Alupro Building Systems Pvt. Ltd Vs Commissioner of Central Excise Bangalore-II (Supreme Court of India)
The Supreme Court in examined whether the activities of cutting, grooving, routing, and fixing Aluminum Composite Panels (ACPs) on building facades amounted to “manufacture” under Section 2(f) of the Central Excise Act, 1944, and whether the Karnataka High Court had jurisdiction to decide the issue under Section 35G of the Act.
The appellant, a construction contractor, imported pre-coated ACPs in standard sizes after paying customs duty. These ACPs consisted of aluminum sheets bonded to a polyethylene core and were mainly used as cladding material for buildings. At its premises, the appellant cut the ACPs into required sizes, grooved them for fixing purposes, and later installed them on building structures using clamps, fasteners, and sealants. Prior to April 2002, the appellant paid excise duty on these activities but later discontinued payment on the belief that the process did not amount to manufacture.
A Show Cause Notice dated 14.09.2004 alleged that cutting, grooving, and assembling ACPs amounted to manufacture and sought recovery of excise duty, interest, and penalties for the period from April 2002 to December 2003. The appellant argued that the process merely enabled functional utility and did not create a new product with a distinct name, character, or use. The Additional Commissioner confirmed the duty demand, interest, and penalty. On appeal, the Commissioner (Appeals) removed the penalty and interest but upheld the finding of manufacture. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) later allowed the assessee’s appeal, holding that no new product emerged and that the Revenue had failed to prove marketability.
