Legal Analysis: M/s Alupro Building Systems Pvt. Ltd. vs. Commissioner of Central Excise, Bangalore-II

Citation: 2026 INSC 582 (Reportable)
Court: Supreme Court of India
Bench: Division Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan
Judgment Author: Justice J.B. Pardiwala
Date of Decision: May 27, 2026
Nature of Judgment: Civil Appeal under Section 35L of the Central Excise Act, 1944 against the judgment of the Karnataka High Court, which had allowed the Revenue’s appeal and held that cutting and grooving of Aluminum Composite Panels (ACPs) amounted to “manufacture” under Section 2(f) of the Act.

Synopsis of the Judgment
The appellant was a construction contractor who imported pre‑coated Aluminum Composite Panels (ACPs) and undertook cutting, grooving (routing), and fixing them on building façades. The Revenue issued a show cause notice demanding excise duty on the ground that the process of cutting and grooving amounted to “manufacture”. The Additional Commissioner confirmed the demand, the Commissioner (Appeals) partly allowed but upheld the finding of manufacture, and the CESTAT allowed the assessee’s appeal holding that no new product emerged and the Revenue had not proved marketability. The High Court, in an appeal under Section 35G of the Act, reversed the CESTAT and held that the process amounted to manufacture. The Supreme Court allowed the assessee’s appeal, holding that (i) the High Court had no jurisdiction to entertain the appeal because the question of excisability of goods falls within the exclusive appellate jurisdiction of the Supreme Court under Section 35L(1)(b) read with Section 35L(2) (even prior to the clarificatory amendment), and (ii) on merits, the process of cutting and grooving does not bring into existence a distinct commercial product with a new name, character or use; it merely adapts the panels for a specific purpose, and therefore does not amount to “manufacture” under Section 2(f). The judgment also clarified the two‑fold test of manufacture (transformation into a distinct product and marketability) and the burden of proof on the Revenue.

1. Basic Information of the Judgment

• Case Title: M/s Alupro Building Systems Pvt. Ltd. vs. Commissioner of Central Excise, Bangalore-II

• Civil Appeal No.: 8030 of 2010

• Bench: Justice J.B. Pardiwala and Justice R. Mahadevan (Division Bench)

• Judgment Author: Justice J.B. Pardiwala

• Date of Decision: May 27, 2026

• Citation: 2026 INSC 582 (Reportable)

• Appeal From: Judgment and order dated 01.04.2010 passed by the High Court of Karnataka in Central Excise Appeal No. 17 of 2007, which had allowed the Revenue’s appeal and set aside the order of the CESTAT.

2. Legal Framework

Laws and Provisions Involved:

• Central Excise Act, 1944: Section 2(f) (definition of “manufacture” – includes any process incidental or ancillary to completion, or specified in Chapter Notes, or packing/labelling as amounting to manufacture), Section 35G (appeal to High Court – excluding orders relating to determination of any question having relation to rate of duty or value of goods for assessment), Section 35L (appeal to Supreme Court – including orders relating to determination of any question having relation to rate of duty or value of goods; sub‑section (2) inserted in 2014 clarifies that such determination includes taxability or excisability of goods).

• Central Excise Tariff Act, 1985: Chapter 76 (aluminium and articles thereof), Heading 7606 (aluminium plates, sheets and strip).

• Finance (No. 2) Act, 2014: Clause 99 which inserted sub‑section (2) in Section 35L of the Central Excise Act, 1944, with a clarificatory note.

• Constitution of India, 1950: Article 136 (special leave to appeal).

Key Precedents Cited and Applied:

• Navin Chemicals Manufacturing & Trading Co. Ltd. v. Collector of Customs (1993) 4 SCC 320 – The expression “relation to” in Section 130 of the Customs Act (pari materia to Section 35G) indicates a direct and proximate relationship to rate of duty or value of goods; classification and excisability are such questions.

• Commissioner of Customs v. Motorola (India) Ltd. (2019) 9 SCC 563 – Under the Customs Act (Sections 130 and 130E), which are pari materia to Sections 35G and 35L of the Central Excise Act, an appeal relating to determination of any question having relation to rate of duty lies directly to the Supreme Court, not to the High Court.

• CST v. Ernst and Young (P) Ltd. (2014) 27 GSTR 22 (Delhi High Court) – Dispute regarding taxability of services falls under “rate of duty” within Section 35G exclusion.

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