Manufacture under central excise arises when processing creates a commercially distinct product with independent marketability.

Converting aluminium ingots into aluminium billets by re-melting and adding alloys amounted to manufacture under Section 2(f) of the Central Excise Act, 1944 because the process produced a new and commercially distinct commodity. The Court applied the tests of loss of original identity, distinct name, character, use and marketability, and found that billets were separate from ingots in trade and under Chapter 76. As the billets were independently marketable and sold in the open market, central excise duty was attracted on the resulting product.

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Issues: Whether the process of converting aluminium ingots into aluminium billets by re-melting and adding alloys amounts to manufacture attracting central excise duty.

Analysis: Manufacture under Section 2(f) of the Central Excise Act, 1944 covers a process that brings into existence a new and commercially distinct commodity. The controlling tests are whether the original commodity loses its identity and whether the resulting product has a distinct name, character, use, and marketability. Aluminium billets were found to be different from aluminium ingots, and the billets were not only used captively but were also sold in the open market. The tariff entry under Chapter 76 separately refers to ingots and billets, reinforcing their distinct commercial identity.

Conclusion: The process amounted to manufacture and the resulting aluminium billets were liable to central excise duty. The Revenue succeeded on this issue.

Final Conclusion: The appeal was allowed, the order of the Tribunal was set aside, and the Commissioner's demand was restored.

Ratio Decidendi: A process amounts to manufacture when it results in emergence of a new commercially distinct commodity having independent marketability and a separate identity in trade.

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