Excisability and rate of duty disputes fall within the exclusive jurisdiction of the Supreme Court.

The appellant is a construction contractor that imports pre-coated Aluminium Composite Panels (ACPs) from foreign manufacturers in standard sizes.

To install these on building facades, the appellant cuts the panels into specific rectangular or square sizes and performs "routing/grooving" (making grooves on the back) to allow them to be affixed to frames using clamps and sealants.

From April 2002, the appellant stopped paying excise duty, believing this process did not amount to "manufacture."

The Revenue issued a Show Cause Notice in 2004, demanding duty; the Commissioner (Appeals) upheld the demand.

The CESTAT reversed this, holding that the Revenue failed to prove marketability and that no new product emerged.

The Revenue appealed to the High Court of Karnataka under Section 35G, which restored the demand.

Orders relating to the "rate of duty" or "value of goods for purposes of assessment" fall under the exclusive appellate jurisdiction of the Supreme Court, not the High Court under Section 35G and 35L of the Central Excise Act, 1944.

Section 35L(2) (inserted in 2014) clarifies that "rate of duty" includes the determination of "taxability or excisability".

The two-fold test for manufacture (Transformation Test and Marketability Test) as established in Union of India v. J.G. Glass Industries Ltd. and Servo-Med Industries (P) Ltd. v. CCE.

Mere change in a substance is not manufacture as established in Union of India v. Delhi Cloth & General Mills Co. Ltd.

The Court reasoned that "excisability" is a precursor to assessment and thus intrinsically linked to the "rate of duty"; therefore, the Revenue should have appealed the CESTAT order directly to the Supreme Court under Section 35L.

The Court held that the 2014 amendment to Section 35L (sub-section 2) was clarificatory and retrospective because it merely made explicit what was already implicit in the statutory scheme.

The Court found that cutting and grooving ACPs does not constitute "manufacture" as the ACPs retained their essential character and properties and the process merely adapted their dimensions for installation.

Following CCE v. S.R. Tissues (P) Ltd. and Aman Marble Industries (P) Ltd. v. CCE, the Court noted that cutting to size or shape for convenience/use does not create a new commercial product.

The Court reiterated that the burden of proving a product is "commercially known" for sale lies strictly with the Revenue, which failed to discharge it here.

The Court held that the process of cutting and grooving does not amount to "manufacture".

The Court allowed the appeal, set aside the High Court's judgment, and restored the CESTAT's order in favor of the appellant.