Manufacture test for iron ore concentrate fails where processing only improves Fe content without creating a new product.

Processing iron ore into concentrate did not amount to manufacture for central excise purposes because the activity only improved Fe content and did not create a new and distinct commercially recognisable product. The absence of any special processing facility and the fact that the process was incidental, rather than one giving rise to a separately known product in trade, supported that conclusion. The Board circular and cited precedents reinforced the view that mere enrichment or concentration of ore, without emergence of a new product, is insufficient to attract excise duty. Accordingly, the duty demand and penalty could not survive.

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Issues: Whether the processing of iron ore into concentrate amounted to manufacture so as to attract central excise duty.

Analysis: The process undertaken was not in dispute and no special process facility was shown to exist. The reasoning turned on whether an increase in Fe content by incidental processing created a new and distinct product known in the trade as iron ore concentrate. The finding was that mere improvement in Fe content did not, by itself, bring into existence a product amounting to manufacture. The view was also supported by the Board circular and the cited precedents relied upon by the appellant.

Conclusion: The processing did not amount to manufacture of a new product, and the duty demand and penalty could not survive.

Ratio Decidendi: Mere improvement in the quality or concentration of an ore, without emergence of a new and distinct commercially recognizable product, does not constitute manufacture for excise purposes.

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