Case: Manganese Ore India Ltd Vs. State of M.P. &amp; Others

into a new commodity commercially known as a distinct and separate commodity having its own character, use and name whether it be the result of one process or several processes, manufacture takes place; the transformation of the goods into a new and different article should be such that in the commercial world it is known as another and different article. Pre-recorded audio cassettes are certainly goods known in the market as distinct and different from blank audio cassettes. The two have different uses. A pre-recorded audio cassette is generally sold by reference to its name or title which is suggestive of the contents of the audio recording on the cassette. The appellant is indulging in a mass production of such pre-recorded audio cassettes. It is a manufacturing activity. The appellants activity cannot be compared with a person sitting in the market extending the facility of recording any demanded music or sounds on a blank audio cassette brought by or made available to the customer, which activity may be called a service. The Tribunal was not right in equating the appellants activity with photoprocessing and holding the appellant a service industry."26. In Aspinwall & Co. Ltd. (supra) this Court has held as follows:-"13. The word "manufacture" has not been defined in the Act. In the absence of a definition of the word "manufacture" it has to be given a meaning as is understood in common parlance. It is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines. If the change made in the article results in a new and different article then it would amount to a manufacturing activity.14. This Court while determining as to what would amount to a manufacturing activity, held in CST v. Pio Food Packers, 1980 Supp. SCC 174 : that the test for determination whether manufacture can be said to have taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity, but is recognized in the trade as a new and distinct commodity. It was observed: (SCC p. 176, para 5)"Commonly manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several 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 recognized as a new and distinct article that a manufacture can be said to take place."15. Adverting to facts of the present case, the assessee after plucking or receiving the raw coffee berries makes it undergo nine processes to give it the shape of coffee beans. The net product is absolutely different and separate from the input. The change made in the article results in a new and different article which is recognized in the trade as a new and distinct commodity. The coffee beans have an independent identity distinct from the raw material from which it was manufactured. A distinct change comes about in the finished product.16. Submission of the learned counsel for the Revenue that the assessee was doing only the processing work and was not involved in the manufacture and production of a new article cannot be accepted. The process is a manufacturing process when it brings out a complete transformation in the original article so as to produce a commercially different article or commodity. That process itself may consist of several processes. The different processes are integrally connected which results in the production of a commercially different article. If a commercially different article or commodity results after processing then it would be a manufacturing activity. The assessee after processing the raw berries converts them into coffee beans which is a commercially different commodity. Conversion of the raw berry into coffee beans would be a manufacturing activity."27. This Court in Servo-Med Industries Pvt. Ltd. v. Commissioner of Central Excise, 2015 (6) SCALE 137 has held as under:-"27.(1) Where the goods remain exactly the same even after a particular process, 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.""27.(4) Where the goods are transformed into goods which are different and/or new after a particular process, such goods being marketable as such. It is in this category that manufacture of goods can be said to take place."28. Thus, the Ferro Manganese Plant, being a unit involved in manufacturing of ferromanganese alloy as opposed to a unit involved in crushing, treating, processing, etc. of manganese ore, cannot be treated within the extended definition of `mine within the Explanation (b) of Part B of Table of Rates of Duty to Section 3(1) of the Act.29. The Executive Engineer and Chief Electrical Inspector, Government of Madhya Pradesh, vide its letter dated 06.02.2005 to the Superintendent Engineer and Deputy Electrical Inspector, Government of Madhya Pradesh, had confirmed as under:-"On spot inspection it is confirmed that, Ferro Manganese Plant does not come in the Mining Area and Electricity Duty @ 8% being charged at present by the M.P. State Electricity Board is proper."30. The Ferromanganese Alloy so manufactured by the appellant using the mineral Manganese at its Ferromanganese plant is an entirely different product from its mineral raw material both physically and even chemically. Moreover, unlike Manganese ore a ferromanganese alloy can never be found in the natural state and it has to be manufactured from the manganese ore and other minerals only. The same logic applies to copper concentrate as a different and distinct product comes into existence.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]18. Mining would comprehend every activity by which the mineral is extracted or obtained from earth irrespective of whether such activity is carried on at the surface or in the bowel, but it must be an activity for winning a mineral. For the purpose of Item 3 `mine to which electrical energy is sold, supplied or consumed, it would include machinery or premises situated in the adjacent to the mine, provided the electricity is used for crushing, processing, treating or transporting the minerals. The word `mineral used in the aforesaid Explanation under the Act would have reference to the mineral which is mined and is then crushed, processed, treated or transported. The word `processing used in the Explanation has to be interpreted in the context and for the purpose of the said item. Process can be given either a wide or a narrow meaning. In the context in which it is used in the Explanation, we are disposed to think that it must be given a meaning which emerges when we apply the rule of noscitur a sociis which means that the meaning of the word is to be judged by the company it keeps. [See : Rohit Pulp and Paper Mills Ltd. v. Collector of Central Excise, (1990) 3 SCC 447  ]. The rule of noscitur a sociis has been applied and accepted in Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer & Ors., 2004(1) S.C.T. 667 : (2004) 1 SCC 755.   We would prefer to construe the said word in the Explanation with reference to the words before and after for the word `processing used therein. The word `processing herein, we think, should be interpreted and understood with the associated words `crushing and `treating. The word `processing is susceptible of the meaning keeping in view the word `crushing and `treatment used before and afterwards.19. We are absolutely conscious that noscitur a sociis rule is not applied when the language is clear and there is no ambiguity, which according to us does exist and perceptible in the Explanation in question. A very broad and a wide definition of the term `processing if applied, would include manufacture of a new or distinct product. Manufacture normally involves a series of processes either by hand or machine. If a restricted construction is not applied it would create and give rise to unacceptable consequences. It is not the intent to treat and regard manufacturing activities as processing. Manufacturing, as is understood, means a series of processes through different stages in which the raw material is subjected to change by different operations. [For different between process and manufacturing see CIT v. Tara Agency, (2007) 6 SCC 429  , Orient Paper and Industries v. State of M.P. and Anr., (2006) 12 SCC 468     and Aspinwall & Co. Ltd. v. Commissioner of Income Tax, Ernakulam, (2001) 7 SCC 525.  Thus, the Ferro Manganese Plant, being a unit involved in manufacturing of ferromanganese alloy as opposed to a unit involved in crushing, treating, processing, etc. of manganese ore, cannot be treated within the extended definition of `mine within the Explanation (b) of Part B of Table of Rates of Duty to Section 3(1) of the Act.The Ferromanganese Alloy so manufactured by the appellant using the mineral Manganese at its Ferromanganese plant is an entirely different product from its mineral raw material both physically and even chemically. Moreover, unlike Manganese ore a ferromanganese alloy can never be found in the natural state and it has to be manufactured from the manganese ore and other minerals only. The same logic applies to copper concentrate as a different and distinct product comes into existence.