Manufacture under excise law does not cover compressing pipeline hydrogen into cylinders for industrial use.

Compressing hydrogen gas received through a pipeline and filling it into cylinders was held not to amount to manufacture under Section 2(f)(ii) of the Central Excise Act, 1944. The analysis turned on the tariff note and the statutory test of whether the process rendered the goods marketable to the consumer; since the gas was already marketable in its original form and the processing was only for filling into cylinders for industrial use, the deeming expression was not extended to industrial users. No central excise duty was payable on that basis.

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Issues: Whether compressing hydrogen gas received through a pipeline into cylinders amounts to manufacture and attracts central excise duty.

Analysis: The activity involved receiving hydrogen gas through a pipeline, compressing it and filling it into cylinders. The relevant tariff note for the goods in question was examined along with the statutory concept of manufacture under Section 2(f)(ii) of the Central Excise Act, 1944. The comparison drawn from other tariff notes showed that where the legislature intended compression or similar treatment to amount to manufacture, it said so expressly. The decisive question was whether the process rendered the gas marketable to the consumer. The gas was already marketable in its original form, and the processing was undertaken only for filling into cylinders for industrial use. The expression relating to treatment rendering goods marketable to the consumer was held not to extend to industrial users or processors in this context.

Conclusion: The activity does not amount to manufacture and no central excise duty is payable on that basis.

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