Manufacture test for excise: filtering and compressing hydrogen gas into cylinders does not create a new commercial product.

Filtering, dehydrating, compressing and filling hydrogen gas into returnable cylinders did not amount to manufacture for excise purposes under Chapter 28 because the process did not create a new and distinct product or make the gas commercially different in character. The Court applied the settled test that manufacture requires a transformation resulting in a commercially distinct commodity, and held that mere treatment, compression and bottling of gas without such change is insufficient. No excise duty was therefore leviable on the respondent-assessee.

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Issues: Whether the process of filtering, dehydrating, compressing and filling hydrogen gas into returnable cylinders amounted to manufacture so as to attract excise duty under Chapter 28.

Analysis: The process involved removal of moisture through the compressor's inbuilt drying system, followed by compression and filling of hydrogen gas into cylinders. The activity did not bring about a new and distinct product, nor did it amount to any treatment that made the goods commercially different in character for the purpose of levy. The process therefore did not satisfy the test of manufacture under the relevant chapter note.

Conclusion: The activity did not amount to manufacture and no excise duty was leviable on the respondent-assessee.

Ratio Decidendi: A process that merely filters, dries, compresses and fills gas into cylinders without creating a new commercially distinct product does not constitute manufacture for excise purposes.

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