Reprocessing and manufacture: goods retaining essential identity were not treated as new excisable products.

Reprocessing does not amount to manufacture unless it results in a new and different article with a distinct name, character or use. The goods returned under Rule 173-H retained their essential identity after reprocessing, and the Department produced no evidence to show that a new identifiable commodity emerged. On that basis, the reprocessed goods were not liable to duty as new goods and the assessee's claim succeeded.

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Issues: Whether the reprocessed goods cleared by the assessee were the same goods received back under Rule 173-H or had emerged as new identifiable goods attracting duty.

Analysis: The rejected goods were received back as White Dextrine and Mapropharm Starch and were cleared after reprocessing as Yellow Dextrine and Maize Starch Powder. The Department did not produce evidence to rebut the assessee's case that the processes did not alter the essential identity or characteristics of the returned goods. The governing principle is that manufacture requires a transformation resulting in a new and different article having a distinct name, character or use, and a mere change in physical form, shape or substance is not enough. Applying that principle, the reprocessing did not bring into existence a new identifiable commodity.

Conclusion: The reprocessed goods were not liable to duty as new goods and the assessee's claim under Rule 173-H succeeded.

Final Conclusion: The departmental appeal failed because the reprocessed goods retained their essential identity and did not amount to manufacture of a new excisable product.

Ratio Decidendi: Reprocessing does not amount to manufacture unless it produces a commercially distinct article having a different name, character or use.

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