Manufacture test for refined vegetable oil upheld: refining crude oil creates a distinct commodity and supports concessional furnace oil use.

Conversion of crude vegetable oil into refined vegetable oil constitutes manufacture for sales tax purposes because the refining process produces a commercially distinct commodity with a different name, character and use. Applying the commercial parlance test and the principle that manufacture requires emergence of a new and distinct article, the court held that furnace oil used in that process qualified for concessional purchase against Form XVII. The prior decision on the issue had already attained finality, and the assessee succeeded; the assessment orders were set aside and the writ petitions were allowed.

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Issues: Whether the conversion of crude vegetable oil into refined vegetable oil amounts to manufacture under the relevant sales tax law, and whether purchase of furnace oil against Form XVII for use in that process is permissible.

Analysis: The issue had already been decided in the assessee's favour in earlier proceedings and that decision had attained finality. The reasoning accepted that crude vegetable oil and refined vegetable oil are commercially different commodities, and that the test of manufacture is whether a new and distinct article emerges with a different name, character or use. Applying the commercial parlance test and the accepted principles on manufacture, the process of refining crude vegetable oil into refined vegetable oil was held to bring into existence a distinct commodity. On that basis, furnace oil used in the manufacturing process qualified for concessional treatment for the relevant purchase against Form XVII.

Conclusion: The conversion of crude vegetable oil into refined vegetable oil amounts to manufacture, and the purchase of furnace oil against Form XVII for that process is permissible. The assessee succeeds on this issue.

Final Conclusion: The assessment orders were set aside and the writ petitions were allowed.

Ratio Decidendi: Where processing results in a commercially distinct product with a separate identity, name or use, the process constitutes manufacture for fiscal purposes.

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