Manufacture test for high twisting of yarn failed where the product remained the same, supporting exemption availability.

High twisting of texturised yarn did not amount to manufacture because the process did not produce a new excisable product with a distinct identity; the output remained twisted yarn, supported by the chemical examiner's opinion. On that basis, Chapter Note 3 of Chapter 54 of the Central Excise Tariff Act, 1985 and Section 2(f) of the Central Excise Act, 1944 were not satisfied. The availability of exemption to similarly placed assessees under the relevant notifications also supported the view adopted by the Commissioner, so the exemption was held available and the departmental appeal failed.

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Issues: Whether the process of high twisting or creping of texturised yarn resulted in manufacture of a new excisable product, and consequently whether the assessee was entitled to the claimed exemption.

Analysis: The material on record showed that the input was texturised or twisted yarn and that the process undertaken was high twisting. The resultant product was also found to be twisted yarn, as supported by the chemical examiner's opinion. In the absence of emergence of a new product with a distinct identity, the process did not amount to manufacture for the purpose of Chapter Note 3 of Chapter 54 of the Central Excise Tariff Act, 1985 and Section 2(f) of the Central Excise Act, 1944. The fact that similarly placed assessees had been granted exemption under the relevant notifications also supported the view taken by the Commissioner.

Conclusion: The process did not amount to manufacture and the exemption was available; the departmental appeal failed.

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