Manufacture test for crushed stone: conversion of boulders into smaller stones creates excisable goods, though penalty was deleted.

Crushing boulders into smaller stones was treated as manufacture for central excise purposes because the process produced a commercially distinct article known to the market as a separate commodity. On that basis, crushed stones were held classifiable under Chapter 25 and liable to excise duty. The penalty was deleted because the dispute involved interpretation of the tariff and the manufacture test, leaving the duty demand intact but granting partial relief on penalty.

---

---

Issues: Whether crushing of boulders into stones of smaller sizes amounts to manufacture so as to attract central excise duty under Chapter 25 of the Central Excise Tariff Act, 1985.

Analysis: The Tribunal noted that the issue had earlier been decided against the appellants and that subsequent Tribunal decisions had consistently held crushing or grinding of limestone to be manufacture. It distinguished the sales tax decisions relied upon by the appellants, and relied on the Central Excise authorities holding that a process resulting in a commercially distinct product satisfies the test of manufacture. Applying the settled principle that excise duty is attracted when a process brings into existence a new commodity known to the market as a distinct article, the Tribunal held that crushing boulders into smaller stones produces excisable goods classifiable under Chapter 25.

Conclusion: Crushing of boulders into stones of smaller sizes amounts to manufacture and the resulting crushed stones are liable to central excise duty.

Final Conclusion: The duty demand was upheld, but the penalty was deleted because the dispute was one of interpretation, leaving the appellants with only partial relief.

Ratio Decidendi: A process is manufacture for excise purposes if it results in a commercially distinct product, and crushing boulders into smaller stones satisfies that test.

---