Manufacture test for electricity duty: process creating a product of different character entitled the unit to industrial tariff treatment.

Gujarat HC held that a unit using liquid argon and nitrogen as raw materials, converting them through compression, impurity removal and heat treatment into gas with different character and quality, was engaged in manufacture under the relevant legal framework. Because the process produced an end product distinct from the input materials, the unit was classified as an industrial manufacturing unit rather than a non-industrial unit, and it was entitled to electricity duty at 10% instead of 60% under the Bombay Electricity Duty Act, 1958.

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Issues: Whether the petitioner's unit was a manufacturing unit entitled to electricity duty at 10% under the Bombay Electricity Duty Act, 1958, instead of being treated as a non-industrial unit liable to 60% duty.

Analysis: The process undertaken in the unit involved use of liquid argon and nitrogen as raw materials and their conversion into gas through compression at high pressure, removal of impurities through a vaporizer, and heat treatment. The materials used and the end product were found to have different qualities and characteristics. On that basis, the activity was held to amount to manufacture within the governing legal framework, and the unit was treated as an industrial manufacturing unit.

Conclusion: The petitioner's unit was held to be a manufacturing unit and was entitled to be charged electricity duty at 10% and not 60%.

Ratio Decidendi: A process that transforms raw materials into a product with a different character and quality constitutes manufacture for the purpose of industrial classification and applicable duty.

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