Commercial identity test under central excise: compressing and bottling carbon dioxide was not manufacture

Compressing and bottling carbon dioxide received through a pipeline did not amount to manufacture under the Central Excise Act because the product retained its identity and remained carbon dioxide in commercial parlance. Note 10 to Chapter 28, inserted from 1-5-1997, was not treated as retrospective or clarificatory for the relevant period, so it could not be applied to convert the process into manufacture. The Tribunal therefore sustained the finding that the process did not fall within Section 2(f) and the goods were not excisable.

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Issues: Whether compressing and bottling of carbon dioxide received through pipeline amounted to manufacture under the Central Excise law, and whether Note 10 to Chapter 28 of the Central Excise Tariff Schedule operated retrospectively.

Analysis: The only substantial departmental contention was that Note 10 to Chapter 28, inserted with effect from 1-5-1997, was clarificatory and therefore retrospective. The appeal itself treated the insertion as prospective, and no basis was found to treat the note as having retrospective effect. The process in question was examined in the light of the finding that carbon dioxide remains carbon dioxide even after compression and is known as such in commercial parlance. Following that finding, the Tribunal held that the respondents' process did not bring about a manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944.

Conclusion: The process of compressing and bottling carbon dioxide did not amount to manufacture, and the goods were not excisable.

Final Conclusion: The departmental challenge failed, and the order holding the process as non-manufacture was sustained.

Ratio Decidendi: Compression and bottling of a product that retains its identity in commercial parlance does not amount to manufacture unless the statutory deeming provision is applicable prospectively to the relevant period.

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