Manufacture requires a new and distinct product; mere cement homogenisation and packing did not qualify for sales tax exemption.

A process amounts to manufacture only when it brings into existence a new and distinct product with a changed identity. Here, bulk cement was brought to the Mangalore unit and only homogenised and packed; the technical material showed no chemical change inside the silos and no transformation of cement into a different commodity. As the input and output remained cement, the activity was held to be mere packing and marketability enhancement, not manufacture. The unit therefore did not qualify as a new industrial unit entitled to sales tax exemption under the notification.

---

---

Issues: Whether the cement unit set up at Mangalore was engaged in manufacture of cement so as to qualify as a new industrial unit entitled to exemption from sales tax under the notification issued under Section 19C of the Karnataka Sales Tax Act, 1957.

Analysis: The relevant test was whether the process carried on at Mangalore brought about a transformation resulting in a new and different commodity. The material on record showed that bulk cement was transferred from Gujarat to Mangalore and subjected at the Mangalore facility only to homogenisation and packing. The technical report recorded that there was no chemical change in the cement inside the silos and that the process merely maintained the cement in homogeneous form to facilitate loading into bags. Since the product brought in and the product taken out remained cement, the activity did not amount to manufacture. A process that merely improves marketability or facilitates packing, without producing a new end-product, does not constitute manufacture.

Conclusion: The unit at Mangalore was a packing unit and not a manufacturing unit, and the appellant was not entitled to sales tax exemption under the notification.

Ratio Decidendi: Manufacture requires a process that brings into existence a new and distinct product; mere homogenisation or packing of an existing commodity, without chemical or identity change in the end-product, is not manufacture.

---