Page 299 - ELT_1_1st April 2020_Vol 372_Part

2020 ] COMMR. OF C. EX. & SERVICE TAX, JAMMU & KASHMIR v. GRAVITA METALS 185

34. …. ….
35. It is trite to state that “manufacture” can be said to have taken place
only when there is transformation of raw materials into a new and different
article having a different identity, characteristic and use. While mere im-
provement in quality does not amount to manufacture, when the change or
a series of changes transform the commodity such that commercially it can
no longer be regarded as the original commodity but recognised as a new
and distinct article. In the instant case, after going through the various steps
that are carried out by the assessee for getting surgical cotton from raw cot-
ton, we can certainly say that cotton has undergone a change into a new
commercially identifiable commodity which has a different name, different
character and different use. The process of transformation is not merely
processing to improve quality or superficial attributes of the raw cotton.
The cotton loses its original form and it marketed as a commercially differ-
ent and distinct product. This aspect of the matter is rightly noticed by the
High Court by relying upon the decision of this Court in Empire Industries
case (supra) wherein this Court has explained the meaning of the expres-
sion ‘manufacture” as when the result of the treatment, labour and manipu-
lation a new commercial commodity has emerged which has a distinctive
new character and use.”
Admittedly, in this case, the refined lead is known with a separate name hav-
ing characteristic of 99.9% of purity and having a different use by a particular Section of
battery manufacturers. In that circumstances, M/s. GM has passed the test of
‘Manufacture’ and in the light of the decision in the case of Delhi Cloth and Gen-
eral Mills Co. Limited (supra) the product which is known with different nomen-
clature and character and use is known to a ‘manufactured’ item. Therefore, the
activity undertaken by M/s. GM amounts to manufacture.
18. Further, we find that in the case of TT Recycling Management India
Pvt. Limited (supra), the Advance Ruling has given findings that process of con-
version of various grades of stainless steel scrap to blended metal scrap amounts
to manufacture. Further, the Hon’ble Apex Court in the case of Mahavir Alumini-
um Limited (supra) held that making billets by melting and casting the ingots
amounts to manufacture, as it is a commercially different product. Further, we
also take note of the fact that the Hon’ble Apex Court in the case of Shyam Oil
Cakes (supra) proceeded on the basis that, cumulatively conditions are to be satis-
fied in the definition of manufacture due to the presence of “and”. As clarified by
the Board itself in 2006, such a requirement is not necessary in the definition of
manufacture as the same does not have any requirement of cumulative satisfac-
tion of conditions. Further, in the case of Servo-Med Industries Pvt. Limited (supra),
the Hon’ble Apex Court setforth the following tests to found out whether the
activity by the assessee amounts to manufacture or not :-
“27. The case law discussed above falls into four neat categories.
(1) Where the goods remain exactly the same even after a particular pro-
cess, there is obviously no manufacture involved. Processes which remove
foreign matter from goods complete in themselves and/or processes which
clean goods that are complete in themselves fall within this category.
(2) Where the goods remain essentially the same after the particular pro-
cess, again there can be no manufacture. This is for the reason that the orig-
inal article continues as such despite the said process and the changes
brought about by the said process.

EXCISE LAW TIMES  1st April 2020  347