Manufacture test in tax classification: mere shaping of iron and steel did not create a new commodity.

Conversion of angle iron into a steel structure known as a drift eliminator did not amount to manufacture because the record showed no systematic or extensive manufacturing process and no clinching evidence that the original identity of iron and steel was lost. The authorities found that the raw material was merely moulded into the final article, so the product did not become a new commodity falling under the residuary tax entry. As the Revenue failed to prove manufacture, the commodity remained classifiable as iron and steel and was taxable at the lower rate rather than the residuary rate.

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Issues: Whether conversion of angle iron into a steel structure known as drift eliminator amounted to manufacture so as to attract tax at the residuary rate, or whether it retained its identity as iron and steel taxable at the lower rate.

Analysis: The record contained no evidence of any systematic or extensive manufacturing process undertaken by the dealer. The findings recorded by the authorities below were that steel rod and angle iron were merely moulded into the final article and that the original identity of iron and steel was not lost. In the absence of clinching evidence from the Revenue to establish manufacture, the commodity could not be treated as a new product falling in the residuary entry. The decision relied upon by the Revenue was distinguishable because, in that case, the manufacturing process was specifically proved and found to have resulted in emergence of a new commodity.

Conclusion: The conversion did not amount to manufacture. The commodity was liable to be taxed as iron and steel at 4%, not at the residuary rate of 12%, and the question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where no evidence establishes a manufacturing process and the article retains the original identity of the raw material, the process does not amount to manufacture for purposes of tax classification.

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