Hardening and tempering of soft steel is not manufacture where the product remains identifiable and only physical properties improve.

Hardening and tempering of soft steel strips does not amount to manufacture where the material remains identifiable as strips and only its physical properties, such as hardness, are improved. The decisive test is whether the process brings about a complete transformation of the raw material into a distinct and new product; absent such transformation, manufacture is not established. On this basis, the Revenue's challenge failed and the impugned order was sustained.

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Issues: Whether hardening and tempering of soft steel amounts to manufacture.

Analysis: The process was found to leave the steel strips as strips even after hardening and tempering, the only change being acquisition of additional physical properties such as hardness. The decisive test applied was whether the process brought about a complete transformation of the raw material into an identifiable and distinct new product.

Conclusion: Hardening and tempering of soft steel was held not to amount to manufacture.

Final Conclusion: The Revenue's challenge failed and the impugned order was sustained.

Ratio Decidendi: A process amounts to manufacture only when it results in a complete transformation into a distinct and identifiable new product; mere improvement of physical properties is insufficient.

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