What is Deemed Manufacture
The activities which are not manufacture in general sense but has deliberately included in the definition of manufacture, so that Excise Duty can be charged on them
Definition of Deemed Manufacture
It includes any process
(ii) which is specified in relation to any goods in the Section or Chapter Notes of the
Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture; or
(iii) which, in relation to goods specified in the Third Schedule, involves packing or repacking
of such goods in a unit container or labelling or re-labelling of containers including the
declaration or alteration of retail sale price on it or adoption of any other treatment on the
goods to render the product marketable to consumer
The Third Schedule to the Act covers the goods which are assessed on the basis of retail sale price
ABC Co. is buying oil in drums of 200 liters. They pack this oil in small tins of one litre each,
put their label giving details of contents, volume and MRP. Advise whether ABC Co. are liable
to pay excise duty on small tins sold by them.
Mere repacking from large container to small pack is not 'manufacture' of oil as oil continues
to be oil – no new product comes into existence having a distinct name, character or use.
Hence, the activity is not 'manufacture' and excise duty is not payable.
However, if such oil is covered under section 4A of Central Excise Act, 1944 (RSP based
valuation provisions), the activity of labelling will be 'deemed manufacture' and ABC Co. will
be liable to pay excise duty on such containers of one litre each.