Mere Fitting Of Lenses Into Frames Isn’t Excise Manufacture: Kolkata CESTAT Sets Aside ₹14.21 Lakh Demand Against Medical Research Foundation

A show-cause notice dated 4 December 2017 demanded central excise duty of ₹14,21,647 for November 2012 to June 2017 on the basis that the appellant manufactured spectacles falling under CET 9004 by fitting lenses into frames. The notice invoked the extended period of limitation.

The appellant contended that fitting lenses into frames did not amount to manufacture under Section 2(f) of the Central Excise Act, 1944. The lower authorities confirmed the demand, and the appellant appealed to the Tribunal.

At the hearing, the appellant relied on Titan Company Ltd. v. Commissioner of Central Excise, LTU, Chennai and Assistant Commercial Tax Officer v. Mehta Opticians; the Revenue did not identify a contrary decision.

Section 2(f) of the Central Excise Act, 1944 requires a process to amount to “manufacture” before central excise duty can be imposed.

The Tribunal applied the principle that a change in materials does not, by itself, constitute manufacture: the process must transform the materials into a new and distinct article with a distinctive name, character, or use.

It relied on the Supreme Court’s decision in Assistant Commercial Tax Officer v. Mehta Opticians, which held that an optician who fits lenses into a spectacle frame carries out no manufacturing process and brings no separate or distinct commodity into existence.

It also followed the Madras High Court’s decision in Titan Company Ltd., which held that assembling prescription lenses and spectacle frames, including fitting and minor adjustments, does not amount to manufacture for excise purposes.

The Tribunal found that Titan Company Ltd. squarely applied to the appellant’s activity.

The relevant process was the fitting of lenses into frames; the authorities cited by the Tribunal treated that activity as assembly rather than a transformation producing a new and distinct article.

As the Revenue had identified no contrary authority, the Tribunal followed those decisions and concluded that the activity did not satisfy the test for manufacture under Section 2(f).

It set aside the impugned order, allowed the appeal, and held that the appellant was eligible for consequential relief, if any, in accordance with law.