Manufacture under excise law requires a deemed provision or a new product; tank-to-cylinder filling and ammonia dilution do not qualify.

Filling duty-paid anhydrous ammonia from tankers into cylinders does not amount to manufacture under Chapter Note 9 to Chapter 28, because tankers are not treated as bulk packs and the activity is only a transfer for packing. Dissolving anhydrous ammonia in water to obtain aqueous or liquor ammonia also does not amount to manufacture, as it remains within the same tariff entry and does not create a new and distinct excisable product. The stated ratio is that manufacture arises only where a deeming provision clearly applies or a new product emerges.

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Issues: (i) Whether filling duty paid anhydrous ammonia from tankers into cylinders amounts to manufacture under Chapter Note No. 9 to Chapter 28 of the Central Excise Tariff Act, 1985; (ii) Whether dissolving anhydrous ammonia in water to obtain aqueous ammonia or liquor ammonia amounts to manufacture.

Issue (i): Whether filling duty paid anhydrous ammonia from tankers into cylinders amounts to manufacture under Chapter Note No. 9 to Chapter 28 of the Central Excise Tariff Act, 1985

Analysis: Chapter Note No. 9 treats labeling or relabeling, repacking from bulk packs to retail packs, or any other treatment to render the product marketable to the consumer as manufacture. The activity in question involved transfer of goods from tankers to cylinders, but tankers were not treated as bulk packs within the meaning of the note. The Board's clarification in Circular No. 910/30/2009-CX also supported the view that such transfer from tankers into smaller cylinders does not fall within the deeming fiction of manufacture.

Conclusion: The activity of filling anhydrous ammonia from tankers into cylinders does not amount to manufacture.

Issue (ii): Whether dissolving anhydrous ammonia in water to obtain aqueous ammonia or liquor ammonia amounts to manufacture

Analysis: The product ammonia in anhydrous form and in aqueous solution was treated as falling within the same tariff entry, and the process was only a simple method of transportation without bringing into existence a new and distinct product. The materials relied upon, including the Board's Circular No. 236/70/96-CX and the cited Tribunal precedent, supported the view that conversion of anhydrous ammonia into aqueous ammonia does not satisfy the requirement of manufacture under Section 2(f) of the Central Excise Act, 1944.

Conclusion: Dissolving anhydrous ammonia in water to obtain aqueous ammonia or liquor ammonia does not amount to manufacture.

Final Conclusion: The demand could not be sustained on either ground, and the assessee was held not liable to excise duty on the impugned processes.

Ratio Decidendi: A process amounts to manufacture only if the tariff or chapter note clearly brings it within the deeming provision or it results in a new and distinct excisable product; mere transfer from tankers to cylinders or dissolution in water for transport does not by itself constitute manufacture.

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