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18 May 2025, 06:15 AM
In a recent judgment, the Supreme Court explained the tests to determine if there was a manufacturing process invovled.
Drawing from a catena of precedents, the Court said that to constitute manufacture, the following are the essential features :
i. There must be a process or series of process.
ii. The original commodity or raw material undergoes a transformation through the process or series of process.
iii. At the end of the process or series of process, a new commodity emerges.
iv. The new commodity should have a distinct name, character or use and can no longer be regarded as the original commodity.
v. It should be regarded as distinct from the original commodity and recognized as so in the trade.
A bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan made these observations while determining whether crude degummed soybean oil is an agricultural product or a manufactured product. If it is an agricultural product, it is eligible for benefits on import.
The Court ruled that the crude degummed soybean oil is not an agricultural product because it is not merely a processed form of soybeans but a new marketable commodity with a separate identity.
“The test is not whether the end product is a consumable product or not. Therefore, the High Court clearly missed the point by holding that because crude degummed soyabean oil was not further refined and therefore was not a consumable item; it did not have a distinct identity. This is not the test of manufacture. While there is no dispute that soyabean is an agricultural product, the High Court while endorsing the view of the Assistant Commissioner held that crude degummed soyabean oil is also an agricultural product. Certainly, crude degummed soyabean oil is distinct from soyabean; it is not the same thing as soyabean.”, the court observed.
Case Title: NOBLE RESOURCES AND TRADING INDIA PRIVATE LIMITED (EARLIER KNOWN AS ANDAGRO SERVICES PVT. LTD.) VERSUS UNION OF INDIA & ORS.
Citation : 2025 LiveLaw (SC) 570