In a recent judgment, the Supreme Court of India clarified the essential criteria to determine when a process qualifies as 'manufacture.' The Court emphasized that for a process to be considered manufacturing, it must meet specific conditions drawn from established legal precedents.

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Essential Tests for Manufacture:

1. Process or Series of Processes:
   The process must involve one or multiple steps.
2. Transformation of Raw Material:
   The original commodity or raw material must undergo a significant transformation.
3. Emergence of a New Commodity:
   A completely new product must result from the process.
4. Distinct Name, Character, or Use:
   The newly created product must have a separate identity, recognized in trade.
5. Separation from Original Product:
   The new product should be clearly distinguishable from the original raw material.

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These principles were laid out by a Supreme Court bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan. The case revolved around the classification of crude degummed soybean oil — whether it should be considered an agricultural product or a manufactured product.

Court's Decision:

The Court ruled that crude degummed soybean oil is not an agricultural product because it undergoes a transformation that creates a new, marketable product.

"The test is not whether the end product is a consumable product or not," the Court clarified, emphasizing that the High Court made an error by assuming that because crude degummed soybean oil was not further refined, it remained an agricultural product.

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The Supreme Court concluded that while soybean is an agricultural product, crude degummed soybean oil is a separate, manufactured product due to the transformation process it undergoes.

“Certainly, crude degummed soybean oil is distinct from soybean; it is not the same thing as soybean.” — Supreme Court.

This judgment highlights that any process that significantly alters the nature of a product, giving it a new identity and use, qualifies as 'manufacture.'

Case Title: NOBLE RESOURCES AND TRADING INDIA PRIVATE LIMITED (EARLIER KNOWN AS ANDAGRO SERVICES PVT. LTD.) VERSUS UNION OF INDIA & ORS.