Manufacture for excise purposes can include purification and filtration that makes goods marketable, even if the commodity remains unchanged.

A process of purification and filtration of hydrochloric acid and sulphuric acid was treated as manufacture because Section 2(f) of the Central Excise Act, 1944 covers processes incidental or ancillary to completion of the product. The goods remained the same basic commodities, but the process rendered them marketable, which was sufficient to characterise the activity as manufacture. On that basis, the Tribunal's view was upheld and Modvat credit on the inputs used was available.

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Issues: Whether the process of purification and filtration undertaken by the assessee amounted to manufacture so as to entitle it to Modvat credit on the inputs used.

Analysis: The definition of manufacture under Section 2(f) of the Central Excise Act, 1944 includes processes incidental or ancillary to the completion of a manufactured product. The goods after purification and filtration remained Hydrochloric Acid and Sulphuric Acid, but the process was undertaken to render the product marketable. A process that gives the goods a marketable character and is incidental or ancillary to completion of the product can constitute manufacture even if the basic commodity remains the same. The view taken by the Tribunal was found consistent with this principle.

Conclusion: The process amounted to manufacture and the assessee was entitled to Modvat credit. The appeal failed.

Final Conclusion: The legal effect of the decision is that a process undertaken to make excisable goods marketable may qualify as manufacture where it is incidental or ancillary to completion of the product, and credit based on such manufacture cannot be denied on the ground that the final commodity remains the same.

Ratio Decidendi: A process incidental or ancillary to completion of a product, undertaken to render it marketable, constitutes manufacture within Section 2(f) of the Central Excise Act, 1944 even if the essential commodity does not change into a different product.

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