Manufacture test for sales tax exemption failed where crushing stones into gravel did not create a commercially distinct product.

Crushing boulders and stones into metal gravel of different sizes did not amount to production or manufacture because no commercially distinct commodity emerged. The Court applied the settled test that manufacture requires a new and different article with separate commercial identity, and found that the raw material and end product retained the same identity. As the exemption under S.R.O. No. 968 of 1980 was available only to goods produced by new small-scale industrial units, the unit did not qualify for sales tax exemption. The rejection of the eligibility certificate was therefore upheld.

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Issues: Whether the conversion of boulders and stones into metal gravel of different sizes amounted to production or manufacture so as to entitle the unit to sales tax exemption under S.R.O. No. 968 of 1980.

Analysis: The exemption under S.R.O. No. 968 of 1980 applied to goods produced by new small-scale industrial units. The unit began operations pursuant to that notification, and the later notification under S.R.O. No. 499 of 1990 did not govern the controversy on the relevant entitlement. Applying the settled principle that production or manufacture requires emergence of a commercially different commodity, the Court held that crushing boulders and stones into smaller metal sizes did not create a new and distinct article. The raw material and the end product retained the same commercial identity, and the process did not satisfy the test of manufacture or production for the claimed exemption.

Conclusion: The unit was not entitled to sales tax exemption under S.R.O. No. 968 of 1980, and the rejection of the eligibility certificate was upheld.

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