Manufacture requires a commercially distinct product; mere inter-twining of yarn retaining its identity does not attract duty.

Inter-twining cotton yarn with nylon yarn to produce weft or twinkle yarn did not amount to manufacture because the process did not create a commercially distinct commodity with a separate identity, name, character or use. The materials remained identifiable as duty-paid yarns, and the resulting product was not shown to be known in trade as a separate commercial product. The essential test under Section 2(f) was therefore not met, so classification under Tariff Item 18E could not be sustained and the duty demand and connected proceedings were unsustainable.

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Issues: Whether the process of inter-twining cotton yarn with nylon yarn to produce weft yarn or twinkle yarn resulted in the manufacture of a new and distinct product liable to duty under Tariff Item 18E.

Analysis: The product had to be tested on whether the process brought into existence a commodity commercially different and distinct from the original yarn. The process adopted merely involved inter-twining of two duty-paid yarns in a continuous manufacturing sequence, and the evidence showed that the resulting material retained the essential identity of the component yarns. It was also not shown to be known in trade as a separate commercial product. On that basis, the essential test of manufacture under Section 2(f) was not satisfied, and the classification under Tariff Item 18E could not stand.

Conclusion: The process did not amount to manufacture of a new product, and the impugned duty demand and connected proceedings were unsustainable and in favour of the assessee.

Ratio Decidendi: A process amounts to manufacture only when it brings into existence a commercially distinct commodity with a separate identity, name, character or use; mere blending or inter-twining of materials retaining their essential identity is insufficient.

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