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The term manufacture – explained.

The term manufacture is defined under section 2(f) of the Central Excise Act, 1944. Manufacture involves bringing into existence a new substance having different name, character or use. As the duty is on goods, manufacture must be of goods. In order to be goods, the product should be marketable, i.e. the product should be known in the market as such and should be capable of being brought and sold in the market. It does not mean that the sale of the goods is a precondition for charging duty. Goods which have capability of being bought and sold in the market, will attract Central Excise duty even if they are not marketed and may be consumed captively.

In addition there are certain processes, which are defined as amounting to manufacture. Such processes are specified in the Chapter notes and section notes in the First Schedule to the Central Excise Tariff Act, 1985. There is duty liability in respect of these specified processes even if they may not result in the emergence of a new and distinctive commodity.

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