Manufacture test for dolomite crushing: mere change in form did not create a new commodity, preserving tax exemption.

Crushing dolomite lumps into chips and powder did not amount to manufacture because the process did not create a commercially different or distinct commodity; the material remained dolomite with only its form changed. Mere alteration in shape, without change in basic character, composition, or commercial identity, was insufficient to deny tax-paid goods deduction or sales tax notification exemption. The higher sale price was attributable to crushing, packing, loading, and transport expenses, not to emergence of a new product, so the assessee was entitled to the deduction and exemption.

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Issues: Whether crushing dolomite lumps into chips and powder amounts to manufacture so as to deny deduction of tax-paid goods and exemption under the relevant sales tax notification.

Analysis: The relevant test is whether processing brings into existence a commercially different and distinct commodity. Mere change in form, without a change in basic character, composition, or commercial identity, does not amount to manufacture. On the facts, dolomite remained dolomite whether in lumps, chips, or powder; crushing only altered shape and facilitated use. The price difference was explained by crushing, packing, loading, and transport expenses, not by emergence of a new commodity.

Conclusion: Crushing dolomite lumps into chips and powder did not amount to manufacture, and the sale continued to be of the same tax-paid goods. The deduction under Section 2(r)(ii) and the notification exemption were wrongly denied, and the assessee succeeded.

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