Manufacture test for tax exemption: homogenisation of cement without a new commodity did not qualify as manufacture.

Homogenisation of cement at the Mangalore unit did not amount to manufacture because the process did not bring into existence a commercially new and distinct commodity. Mere processing, improved quality, better marketability, or packing was insufficient where the original cement retained its commercial identity. The technical committee's finding that no manufacture occurred was supported by the record and the applicable legal test. As a result, the petitioner was not entitled to sales tax exemption or an eligibility certificate, and the consequential endorsement and demand were sustained.

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Issues: Whether homogenisation of cement at the Mangalore unit amounted to manufacture so as to qualify the petitioner for sales tax exemption under the industrial incentive notification.

Analysis: The governing test for manufacture is whether the process results in a commercially new and distinct commodity. Mere processing, improvement in quality, or enhanced marketability does not by itself amount to manufacture unless the original commodity loses its commercial identity and a new article emerges. On the admitted facts, cement moved from the Gujarat unit to Mangalore was only subjected to homogenisation and packing. No new product came into existence at Mangalore, and the process remained one of processing rather than manufacture. The claim that the cement became more saleable or of better quality was held insufficient. The factual finding of the technical committee that there was no manufacture was supported by the material on record and by the applicable legal principles.

Conclusion: Homogenisation at Mangalore did not amount to manufacture, and the petitioner was not entitled to the claimed exemption or eligibility certificate.

Final Conclusion: The impugned endorsement and consequential demand were sustained, and the writ petition failed.

Ratio Decidendi: A process amounts to manufacture only when it brings into existence a commercially distinct new commodity; mere processing, homogenisation, or value addition without emergence of a new product does not qualify as manufacture.

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