The Supreme Court has ruled that cutting, grooving and routing aluminium composite panels (ACPs) for installation on building facades does not amount to “manufacture” under the Central Excise Act, while also holding that disputes relating to excisability fall exclusively within the appellate jurisdiction of the Supreme Court and not High Courts.

The Bench of Justice J.B. Pardiwala has observed that the ACPs retained their essential identity throughout the process. The operations merely adapted the material for installation on building facades and did not alter its basic character, composition or commercial identity. 

The case arose from activities undertaken by Alupro Building Systems, a construction contractor engaged in fixing ACPs on building facades. The company imported pre-coated ACP sheets and carried out processes such as cutting the panels into required sizes, grooving them for installation, and fixing them onto structures using frames, clamps and sealants. 

The Revenue authorities alleged that these processes amounted to “manufacture” under Section 2(f) of the Central Excise Act, thereby attracting excise duty. A show cause notice issued in September 2004 demanded over Rs. 21.46 lakh in excise duty along with interest and penalties for the period between April 2002 and December 2003. 

While the adjudicating authority confirmed the demand, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) later ruled in favour of the assessee, holding that no new product emerged and that the Revenue failed to establish marketability of the processed ACPs. 

However, the Karnataka High Court reversed the Tribunal’s order, holding that cutting and grooving transformed the ACPs into commercially distinct products and therefore constituted manufacture. 

One of the key issues before the Supreme Court was whether the Karnataka High Court could hear the Revenue’s appeal at all.

The Court undertook an extensive analysis of Sections 35G and 35L of the Central Excise Act and held that questions relating to excisability or taxability are directly connected to the “rate of duty” and “assessment”, and therefore appeals on such issues lie only before the Supreme Court. 

The Bench observed that the expression “determination of any question having a relation to the rate of duty” must receive a broad interpretation. According to the Court, the issue of whether goods are excisable is inseparably linked to the levy and assessment of duty. 

The judgment emphasised that allowing High Courts to decide such issues could lead to conflicting decisions across States on whether a particular product is excisable, undermining uniformity in tax administration. 

Accordingly, the Court held that the Revenue should have directly approached the Supreme Court under Section 35L instead of filing an appeal before the High Court. 

The Bench also examined the 2014 amendment inserting Section 35L(2), which expressly clarified that questions relating to taxability or excisability are included within disputes relating to “rate of duty”.

The Court ruled that the amendment was clarificatory and retrospective in nature because it merely made explicit what was already implicit in the statutory scheme. 

Referring to the Notes on Clauses and Finance Bill Memorandum, the Court observed that Parliament intended only to clarify the appellate framework and remove recurring disputes regarding jurisdiction. 

On the substantive excise issue, the Supreme Court held that the activities of cutting, grooving, routing and bending ACPs did not result in the emergence of a new commercially distinct product. 

According to the Court, the final installation activities at construction sites — including fixing panels onto frames and sealing gaps — were purely installation processes and could not be treated as manufacturing operations. 

Case Details

Case Title: M/S Alupro Building Systems Pvt. Ltd Versus Commissioner Of Central Excise Bangalore-II

Citation: JURISHOUR-1447-SC-2026 

Case No.: Civil Appeal No. 8030 Of 2010

Date:  27/05/2026

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