Integrated mining and processing can qualify blasting explosives as inputs used in manufacture for exemption purposes.

Explosives used to blast mines for ore were treated as goods used in the manufacture of zinc or lead concentrates because mining and subsequent processing formed one integrated, interdependent production process. The court held that where extraction is essential to obtaining the final concentrate, inputs used at the mining stage are not remote from manufacture and can satisfy a manufacturing exemption notification. On that basis, the explosives met the use condition in Notification No. 191/87, and the exemption was available.

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Issues: Whether explosives used for blasting mines to obtain ore, and not directly in the final manufacture of zinc concentrate, were covered by Notification No. 191/87 as goods used in the manufacture of zinc or lead concentrates.

Analysis: The relevant notification exempted goods falling in specified chapters when used in the manufacture of zinc or lead concentrates. The Court treated mining and subsequent processing as parts of one integrated operation for production of the concentrate. It relied on the established principle that where extraction and processing are interdependent, goods used in mining may be regarded as used in the manufacturing process if they are essential to obtaining the final concentrate. On that basis, the explosives used for blasting the mines were not viewed as remote from manufacture but as part of the integrated process leading to the concentrate.

Conclusion: The explosives satisfied the condition of use in the manufacture of zinc or lead concentrates, and the exemption under Notification No. 191/87 was available to the assessee.

Ratio Decidendi: Where mining and processing together form an integrated and interdependent process of production, goods used in mining may be treated as used in the manufacture of the final product for the purpose of a manufacturing exemption notification.

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