Integrated mining and manufacture can bring blasting explosives within exemption for concentrate production.

Explosives used to blast ore in mining operations were treated as goods used "in the manufacture of" zinc, copper and lead concentrates where mining and concentration formed an integrated and inter-dependent process. The practical, functional meaning of the expression supported exemption because the ore obtained through blasting became the raw material for the downstream concentration process. The analysis rejected a narrow direct-use test and treated the extraction activity as part of the overall manufacturing chain. On that basis, blasting explosives were held eligible for exemption under the relevant notification in the concentrate matters.

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Issues: Whether explosives used for blasting ore in mining operations could be treated as goods used "in the manufacture of" zinc concentrate, copper concentrate, or lead concentrate so as to qualify for exemption under the relevant notification.

Analysis: The exemption covered goods falling in Chapters 28, 29, 36 and 38 when used in the manufacture of copper, zinc, or lead concentrates. The decisive question was whether the explosives employed to blast ore in the mines had the requisite nexus with the manufacturing activity. The mining operation and the subsequent concentration process were held to be inter-linked and inter-dependent, because the ore obtained through blasting constituted the raw material for the downstream concentration process. On that basis, the use of explosives was not confined to a remote or preliminary activity, but formed part of the integrated process of producing concentrates. The expression "in the manufacture of" was given a practical, functional meaning rather than a narrow direct-use meaning.

Conclusion: Explosives used for blasting ore in the mines were held to be used in the manufacture of zinc concentrate and copper concentrate and were therefore eligible for exemption under the notification.

Final Conclusion: The Revenue's appeal succeeded only in the zinc and lead matter before the Tribunal, while the assessees' appeals in the copper concentrate matters were allowed, on the common holding that blasting explosives used in an integrated mining-manufacturing process fall within the exemption.

Ratio Decidendi: Where mining and manufacture form an integrated and inter-dependent process, goods used for extracting the raw ore may be treated as used "in the manufacture of" the final concentrate for purposes of exemption, even if they are not directly consumed in the last-stage manufacturing operation.

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