Iron ore concentration not manufacture where only quality improves and no commercially distinct product emerges.

Processing iron ore into concentrate was held not to amount to manufacture for central excise purposes where the assessee's activity merely improved Fe content through incidental processing and did not bring into existence a commercially distinct new product. The tariff chapter and HSN notes were found insufficient to override the settled position reflected in the Board circular and cited decisions. On that basis, the excise duty demand and penalty could not be sustained.

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Issues: Whether the processing of iron ore into concentrate amounted to manufacture so as to attract central excise duty.

Analysis: The process undertaken by the assessee was undisputed and involved no special processing facility. Mere improvement in the Fe content of iron ore by incidental processing, without emergence of a new product in trade parlance, was held insufficient to constitute manufacture. The impugned order's reliance on the tariff chapter and HSN notes was found not to override the settled position reflected in the Board circular and the cited decisions.

Conclusion: The process did not amount to manufacture and the excise duty demand and penalty could not be sustained.

Ratio Decidendi: A process which only improves the quality or content of iron ore, without bringing into existence a commercially distinct new product, does not amount to manufacture for central excise purposes.

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