TaxTMI 
TaxTMI 
1995 (3) TMI 95
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....urification and distillation undertaken by them does not amount to process of manufacture and accordingly, claimed exemption from duty in respect of such goods under Notification No. 77 of 1963 dated March 1, 1963. The Assistant Collector agreed with the respondent but his order was revised by the Collector (Appeals) who held that the processes undertaken by the respondent do amount to manufacture. Inasmuch as a new commodity known to the market emerges as a result of such processes, he held, they are liable to excise duty. The respondent filed an appeal before the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi which was heard in the first instance by a Bench of two Members. The Member (Technical) agreed with the respondent. He held that the process undertaken by the respondent is merely for improving the quality or purity of the chemicals and does not amount to manufacture. He observed that even after purification, the chemicals are known by the very same name and that there was no change in the chemical formula even after purification. The simple process of distillation and recrystallisation of the chemicals does not amount to manufacture for the purposes of the....
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....cise Tariff Act, 1985 as amounting to manufacture, and the word `manufacture' shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account." 4.The definition is thus an inclusive definition. The purpose of the definition is to include certain processes and activities within the ambit of the said definition which may not otherwise amount to manufacture, as ordinarily understood. This inclusion is in addition to the normal meaning and context of the expression `manufacture'. The said expression has been the subject matter of several decisions of this Court to which a brief reference is necessary to bring out the principles enunciated therein. In Union of India v. Delhi Cloth and General Mills [1977 (1) E.L.T. (J 199) = 1963 Suppl (1) S.C.R. 586] the revenue wanted to levy a duty upon `refined oil' which was obtained by the respondent-manufacturer at an intermediate stage of production of vanaspati. The respondent cleansed the oil purchased by him by applying certain processes and thus obtained `refined oil'. But th....
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.... change in a substance,' however minor in consequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26 from an American Judgment. The passage runs thus :- `Manufacture' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use'." 6.The Court then referred to and dealt with the meaning of expression `goods' occurring in Section 3 and observed thus : "These definitions make it clear that to become "goods" an article must be something which can ordinarily come to the market to be bought and sold. This consideration of the meaning of the word "goods" provides strong support for the view that "manufacture" which is liable to excise duty under the Central Excises and Salt Act, 1944 must be the `bringing into existence of a new substance known to the market'. "But", says the learned counsel, "look at the definition of "manufacture" in the definition clause of the Act and ....
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....tions of bleaching, dyeing, printing, glazing, shrink-proofing etc. against payment of processing charges. The ownership of the cloth rested with the customers who got these processes done to their specifications from the appellant on payment of processing charges. The question was whether the appellant can be said to have undertaken `manufacture' as defined in the Act. M.N. Venkatachaliah, J., as the then learned Judge was, dealt with several decisions of this Court including those referred to above as well as the decisions rendered by this Court under different Sales Tax enactments [including M/s. Tungabhadra Industries Ltd. v. Commercial Tax Officer, Kurnool [1961 (2) S.C.R. 14)] and enunciated the principle in the following words : "The prevalent and generally accepted test to ascertain that there is "manufacture" is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the processes. The principles are clear. But difficulties arise in their appli....
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....ment of certain materials in order to produce a good result, a species of activity performed on the subject-matter in order to transform or reduce it to a certain stage. According to Oxford Dictionary one of the meanings of the word `process' is "a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result." The activity contemplated by the definition is perfectly general requiring only the continuous or quick succession. It is not one of the requisites that the activity should involve some operation on some material in order to its conversion to some particular stage. There is nothing in the natural meaning of the word `process' to exclude its application to handling. There may be a process which consists only in handling and there may be a process which involves no handling or not merely handling but use or also use. It may be a process involving the handling of the material and it need not be a process involving the use of material. The activity may be subordinate but one in relation to the further process of manufacture." 12.The question in the decision was whether the respondent was e....