Manufacture by processing fuller's earth upheld where treatment created a distinct marketable excisable product with different use.

Crushing, pulverising, heating and chemical treatment of fuller's earth was treated as manufacture because the process changed the material's character, properties and commercial use, producing a distinct marketable product with enhanced adsorption and bleaching qualities classifiable as activated bleaching earth. The concurrent findings that the product was cleared under a different description supported excisability and were not disturbed. The extended period of limitation was also upheld because the records and invoices disclosed the nature of manufacture while the product was described differently, justifying duty, penalty and interest; confiscation and the director's penalty were left aside as recorded.

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Issues: (i) Whether the process of crushing, pulverising, heating and chemical treatment of fuller's earth amounts to manufacture and results in a new excisable product classifiable as activated bleaching earth. (ii) Whether invocation of the extended period of limitation and the consequential duty, penalty and interest were justified.

Issue (i): Whether the process of crushing, pulverising, heating and chemical treatment of fuller's earth amounts to manufacture and results in a new excisable product classifiable as activated bleaching earth.

Analysis: The process undertaken did not leave the raw material in its original form. Fuller's earth was converted through successive stages into a product with enhanced adsorption and bleaching properties, different grades, and distinct market use. The Court accepted the concurrent factual findings that the finished product was marketed and invoiced as activated bleaching earth, and that the process altered the character, properties and utility of the original material. Applying the settled test of manufacture, the emergence of a distinct product with a different use supported excisability.

Conclusion: The process amounted to manufacture and the resultant product was classifiable as an excisable product; the finding was against the assessee.

Issue (ii): Whether invocation of the extended period of limitation and the consequential duty, penalty and interest were justified.

Analysis: The concurrent authorities found that the assessee described the product as fuller's earth while clearing it as activated bleaching earth and that the records and invoices disclosed the nature of manufacture. On those findings, the ingredients for invoking the extended period were satisfied. The Court also upheld the imposition of duty, penalty and interest, while affirming the setting aside of confiscation and the director's penalty as recorded by the Tribunal.

Conclusion: The extended period of limitation and the consequential levy of duty, penalty and interest were justified; the finding was against the assessee.

Final Conclusion: The appeal failed because the concurrent findings that the processing of fuller's earth amounted to manufacture and that the demand was time-barred only to the extent otherwise found by the Tribunal were not shown to involve any substantial question of law warranting interference.

Ratio Decidendi: Where a process materially alters a mineral's character, properties and commercial use so as to bring into existence a distinct marketed product, the process amounts to manufacture for excise purposes, and concurrent factual findings to that effect will ordinarily not be disturbed in appeal absent a substantial question of law.

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