Used mobil oil cleaning is not manufacture, so purchase tax under Section 3AAAA did not apply.

Cleaning used mobil oil by heating and treatment with sulphuric acid and phirfull did not amount to manufacture because the oil retained its essential character and no new commercial commodity came into existence. The process merely removed impurities, so the cleaned oil continued to fall within the entry for oil and not within old, discarded or unserviceable goods. On that reasoning, purchase tax under Section 3AAAA was inapplicable, and the sale of the cleaned mobil oil was not taxable as a manufactured product.

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Issues: Whether the purchase of used mobil oil from an unregistered dealer attracted purchase tax under Section 3AAAA, and whether the process of cleaning or refining the used oil amounted to manufacture so as to render the sale of the cleaned mobil oil taxable.

Analysis: The used mobil oil retained its essential character as oil even after removal of impurities by heating and treatment with sulphuric acid and phirfull. The process merely purified the oil and did not bring into existence any new or distinct commercial commodity. Applying the principle that a process is manufacture only when the original goods are consumed or transformed into a different product, the cleaning of used mobil oil was held not to be manufacture. The oil continued to fall within the entry for all kinds of oil and not within the category of old, discarded or unserviceable goods. Since the cleaned product was not a manufactured commodity and the used oil was not shown to have lost its character as oil, Section 3AAAA was inapplicable.

Conclusion: The purchase tax under Section 3AAAA was not leviable and the sale of the cleaned mobil oil was not taxable as a manufactured product. The revision of the assessee was allowed and the revision of the Commissioner was dismissed.

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