Manufacture requires a new commercially distinct product; mixing pan masala with fresh material did not satisfy that test.

Mixing reddish pan masala with fresh pan masala was held not to amount to manufacture under Rule 173-L and Chapter Note 7 because the original and resultant goods retained the same physical and chemical characteristics and no new commercially distinct product emerged. On that basis, the Tribunal's finding that no manufacture had taken place was left undisturbed, and no referable question of law arose from the challenged orders. The reference applications were therefore rejected, with the issue answered against the Revenue and in favour of the assessee.

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Issues: Whether mixing reddish pan masala with fresh pan masala amounted to manufacture under Rule 173-L of the Central Excise Rules, 1944 and Chapter Note 7 of Chapter 21 of the Central Excise Tariff Act, 1985, so as to justify a reference.

Analysis: The Tribunal had held that the process did not amount to manufacture. The court accepted the view that where the physical and chemical characteristics of the original input and the resultant product remain the same, the resultant product cannot be treated as manufactured. On that basis, no referable question of law arose from the orders under challenge.

Conclusion: The proposed question on manufacture was answered against the Revenue and in favour of the assessee, and the reference applications were rejected.

Final Conclusion: The decision leaves undisturbed the Tribunal's finding that the process did not constitute manufacture and declines to make a reference on the stated question of law.

Ratio Decidendi: A process does not amount to manufacture where the original and resultant goods retain the same physical and chemical characteristics and no new commercially distinct product emerges.

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