Manufacture test for iron ore processing fails where crushing and washing only remove impurities and do not create a new commodity.

Crushing, grinding, screening and washing of mined iron ore did not amount to manufacture because the processes merely removed extraneous matter and did not bring into existence a new commercial commodity with a distinct name, character or use. The ore retained its basic identity and continued to be used in the metallurgical industry for metal extraction. Although the HSN note on concentrates was considered, the facts did not show creation of a different commercial product. Iron ore therefore did not become iron ore concentrate, and no Central Excise duty was leviable under Heading 26.01.

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Issues: Whether crushing, grinding, screening and washing of mined iron ore resulted in manufacture of iron ore concentrate and attracted Central Excise duty under Heading 26.01.

Analysis: The relevant test was whether the process brought into existence a new commercial commodity with a distinctive name, character or use. The processes undertaken merely removed extraneous and unwanted material from the ore and did not alter the basic identity of the product. The HSN note on concentrates was considered, but it was held that removal of foreign matter by such processes did not, on the facts, create a different commercial product. The use of the ore before and after the process remained the same, namely use in the metallurgical industry for extraction of metals. The process therefore did not amount to manufacture.

Conclusion: The product remained iron ore and did not become iron ore concentrate; no Central Excise duty was leviable.

Final Conclusion: The appeals failed because the disputed processes did not bring about manufacture of a new excisable commodity and the duty demand was unsustainable.

Ratio Decidendi: A process that merely removes foreign matter from iron ore, without bringing into existence a new commercial commodity having a distinct name, character or use, does not amount to manufacture for Central Excise purposes.

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