Power used only at a preliminary storage stage does not defeat an excise exemption where manufacture begins later.

Power used only at the preliminary stage of unloading or transferring liquid raw materials into storage tanks did not amount to power used in or in relation to manufacture where no change occurred in the materials until the later reaction stage. Applying the settled test that manufacture requires a transformation into a commercially different product, the Court held that the exemption under Notification No. 101/66 was not lost on that basis and the assessee remained entitled to it. The writ petition was also maintainable because the dispute turned on interpretation of the exemption notification, the facts were broadly undisputed, and the existence of departmental remedies did not bar judicial review in those circumstances.

---

---

Issues: (i) Whether the use of power only at the stage of transferring raw materials into storage tanks amounted to power being used in or in relation to the manufacture of detergent powder so as to deny exemption under Notification No. 101/66. (ii) Whether the petition was liable to be rejected on the ground of availability of departmental remedies and pending adjudication.

Issue (i): Whether the use of power only at the stage of transferring raw materials into storage tanks amounted to power being used in or in relation to the manufacture of detergent powder so as to deny exemption under Notification No. 101/66.

Analysis: The relevant test was whether any process in the course of manufacture, or in relation to manufacture, was ordinarily carried on with the aid of power. The Court applied the settled principle that manufacture involves a process by which raw material undergoes some change and a commercially different product emerges. On the admitted facts, power was used only for unloading or transferring liquid raw materials into storage tanks; no change occurred in the raw materials at that stage, and the manufacturing process began only later in the reaction vessel. The intervening measurement stage negatived any reliance on gravitational force as part of the manufacturing process, and the use of power at the preliminary storage stage did not amount to power used in or in relation to manufacture.

Conclusion: The detergent powder was covered by Notification No. 101/66 and was not liable to excise duty on the ground relied on by the Department. The assessee was entitled to the exemption.

Issue (ii): Whether the petition was liable to be rejected on the ground of availability of departmental remedies and pending adjudication.

Analysis: The Court held that the broad facts were not in dispute and the controversy turned on the interpretation of the exemption notification. In such a case, the existence of an alternative departmental remedy was not a bar to writ jurisdiction, particularly where the demand and seizure were founded on the denial of exemption and the departmental view was already known. The matter was therefore fit for judicial determination rather than relegation to the adjudication hierarchy.

Conclusion: The petition was maintainable and the objection based on alternative remedy failed.

Final Conclusion: The exemption applied, the seizure could not be sustained, and the connected licensing consequence also did not arise against the assessee.

Ratio Decidendi: Power used only at a preliminary stage that does not itself bring about any change in the raw material and is unconnected with the actual manufacturing process is not power used in or in relation to manufacture for the purpose of denying an excise exemption notification.

---