Manufacture test for stainless steel scrap processing: grade-specific blended scrap with distinct commercial identity qualifies as manufacture.

Processing assorted stainless steel scrap by sorting, cutting, shredding, sizing, bundling, briquetting and blending to obtain grade-specific blended metal scrap was treated as manufacture under the Central Excise Act, 1944. The applicable test was whether the process brought into existence a new and distinct commercial commodity with a different name, character and use, and whether the original material lost its commercial identity. On the stated facts, the processed scrap became a distinct input of specified grades fit for direct use in stainless steel manufacture, so the activity satisfied the manufacture test.

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Issues: Whether the proposed processing of assorted stainless steel scrap into blended metal scrap of specified grades amounted to manufacture under the Central Excise Act, 1944.

Analysis: The activity involved procurement of assorted scrap in different grades and forms, followed by sorting, cutting, shredding, sizing, bundling, briquetting and blending to produce grade-specific scrap usable by stainless steel manufacturers. The ruling applied the settled test that manufacture requires emergence of a new and distinct commercial commodity having a different name, character and use, and that mere processing is insufficient unless the original commodity loses its commercial identity. On the facts, the proposed process would transform the raw material into blended scrap of specific grades fit for direct use as input in stainless steel manufacture. The contrary departmental opinion was treated as inconclusive and not determinative of the legal issue.

Conclusion: The proposed activity amounts to manufacture.

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