TaxTMI 
TaxTMI 
TaxTMI 
1991 (9) TMI 73
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....tate Chemical Works, the respondents in Civil Appeal Nos. 3593-94 of 1989, are manufacturers of crude sodium sulphate. In the process of manufacture of common salt from brine, in the salt pans in which the process of evaporation takes place some quantities of sodium sulphate present in the brine also crystallise and settle at the bottom as crust. The sodium sulphate is thus obtained as a bye-product. For the purpose of the manufacture, brine is pumped into salt pans using diesel pumps. 3. The benefit of the aforesaid notification was not given to these respondents as pumping of brine into the pans was carried on with the aid of power. The claim for exemption though denied by the original authority, was allowed by the Collector of Customs (Appeals) and that order was affirmed by the Tribunal. 4. M/s. Sunderson (Minerals) Ltd., the respondents in Civil Appeal Nos. 642-643 of 1991 and 1723-1731 of 1991 are manufacturers of lime from coke and lime stone. The raw materials are lifted to the platform at the head of the kiln by the aid of power. At the kiln head, the raw materials are mixed manually and fed into the kiln. Since power is used for lifting the raw materials at the kiln hea....
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....ed in Section 2(f) of the Central Excises and Salt Act, 1944, thus :- "2(f). `Manufacture' includes any process - incidental or ancillary to the completion of a manufactured(i) product; and (ii)which is specified in relation to any goods in the Section or Chapter Notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture." 10. Clause (f) gives an inclusive definition of the term `manufacture'. According to the dictionary, the term `manufacture' means a process which results in an alteration or change in the goods which are subjected to the process of manufacturing leading to the production of a commercially new article. In determining what constitutes `manufacture' no hard and fast rule can be applied and each case must be decided on its own facts having regard to the context in which the term is used in the provision under consideration. 11. Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour and manipulation. Naturally, manufacture is the end-result of one or more processes through which the original commodities are made to pass. The nature and extent of processing m....
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.... not be a process involving the use of material. The activity may be subordinate but one in relation to the further process of manufacture. 14. In J.K. Cotton Mills v. S.T. Officer, (1965) 1 S.C.R. 900, this Court in construing the expression `in the manufacture of goods' held thus :- "But there is no warrant for limiting the meaning of the expression `in the manufacture of goods' to the process of production of goods only. The expression `in the manufacture' takes in within its compass, all processes which are directly related to the actual production." The Court further held thus :- "The expression `in the manufacture of goods' would normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression `in the manufacture of goods'." In that case, the assessee carrying on the business of manufacturing textile goods claimed that certain goods namely, drawing material....
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....he clause will be applicable; and an argument that power is not used in the whole process of manufacture using the word in its ordinary sense, will not be available. It is only with this limited purpose that the legislature, in our opinion, inserted this definition of the word `manufacture' in the definition section and not with a view to make the mere "processing" of goods as liable to excise duty." 16. A process is a manufacturing process when it brings out a complete transformation for the whole components so as to produce a commercially different article or a commodity. But, that process itself may consist of several processes which may or may not bring about any change at every intermediate stage. But the activities or the operations may be so integrally connected that the final result is the production of a commercially different article. Therefore, any activity or operation which is the essential requirement and is so related to the further operations for the end-result would also be a process in or in relation to manufacture to attract the relevant clause in the exemption notification. In our view, the word `process' in the context in which it appears in the aforesaid noti....
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.... shape as they were when they were brought in the truck and were dumped separately on the ground and, therefore, this operation can be termed only `transportation' and cannot be called a `process'. The Gujarat High Court in Nirma Chemical Works (supra) said :- "It must be made clear that it is only at the stage of transferring liquid raw materials from the motor tanker to the storage tank that power is used and at no subsequent stage is any power used. If no change is brought about in the raw material until it reaches the re-action vessel, then no process of manufacture can be said to have taken place until the raw materials are taken to the re-action vessel. Till then they are all preparations made but the raw materials continue to be the same raw materials. Until sulphuric acid and alkyd benzene start re-action on each other, no change takes place in the raw materials. Merely because the goods are stored in one place, may be at an elevated place above the ground, it cannot be said that a process of manufacture which would convert the raw material by different stages into the final product has been undergone. In view of the decision in Chowgule & Co.'s (supra) as to what is mean....
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....everal stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place." 20. It has been made clear in Union of India v. Delhi Cloth & General Mills (supra) that the definition of the word `manufacture' in Section 2(f) puts it beyond any possibility of controversy that if the power is used for any of the numerous processes that are required to turn the raw materials into a finished article known to the market, it would be a case where in or in relation to manufacture process has ordinarily been carried on with the aid of power. It is, therefore, wrong to conclude that every operation in the course of the manufacture should bring about a change and if any operation with the aid of power does not result in a change, it cannot be an integral part of the process in or in relation to manufacture. In Chowgule & Co. Pvt. Ltd. case, what this C....