Manufacturing Process :
It means any process for
(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise, treating or adopting any article or substance with a view to its use, sale, transport, delivery or disposal; or
(ii) pumping oil, water or sewage or any other substance; or
(iii) generating, transforming, transmitting power; or
(iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process, or book binding; or
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or
(vi) preserving or storing any article in cold storage. [Section 2(k)]
The definition is quite important and it has been the subject of judicial interpretation in large number of cases:
(i) What is manufacturing process
The definition of manufacturing process is exhaustive. Under the present definition even transporting, washing, cleaning, oiling and packing which do not involve any transformation as such which is necessary to constitute manufacturing process in its generic sense, are nonetheless treated as manufacturing process. The definition is artificially projected beyond the scope of natural meaning of what the words might convey thus covering very vide range of activities. Madras High Court in the case of In re. Seshadrinatha Sarma, 1966 (2) LLJ 235, held that to constitute a manufacture there should not be essentially some kind of transformation of substance and the article need not become commercially as another and different article from that at which it begins its existence so long as there has been an indisputable transformation of substance by the use of machinery and transformed substance is commercially marketable.
Division Bench of A.P. High Court held that to determine where certain premises is factory, it is necessary that it should carry on manufacturing process and it does not require that the process should end in a substance being manufactured (Alkali Metals (P) Ltd. v. ESI Corpn., 1976 Lab.I.C.186). In another case it was observed that manufacturing process merely refers to particular business carried on and does not necessarily refer to the production of some article. The works of laundry and carpet beating were held to involve manufacturing process. A process employed for purpose of pumping water is manufacturing process. Each of the words in the definition has got independent meaning which itself constitutes manufacturing process.
Following processes have been held to be manufacturing processes:
(1) Sun-cured tobacco leaves subjected to processes of moistening, stripping, breaking up, adaption, packing, with a view to transport to companys main factory for their use in manufacturing cigarette (V.P. Gopala Rao v. Public Prosecutor, AIR 1970 S.C. 66).
(2) The operation of peeling, washing etc., of prawns for putting them in cold storage is a process with a view to the sale or use or disposal of the prawns (R.E.DSouza v. Krishnan Nair, 1968 F.J.R. 469).
(3) Stitching old gunny bags and making them fit for use.
(4) In paper factory, bankas grass packed into bundles manually and despatched to the factory.
(5) Work of garbling of pepper or curing ginger.
(6) Process carried out in salt works in converting sea water into salt.
(7) Conversion of latex into sheet rubber.
(8) A process employed for the purpose of pumping water.
(9) The work done on the bangles of cutting grooves in them which later would be filled with colouring, is clearly a stage in ornamentation of the bangle with view to its subsequent use for sale.
(10) Preparation of soap in soap works.
(11) The making of bidies.
(12) The raw film used in the preparation of movies is an article or a substance and when by the process of tracing or adapting, after the sound are absorbed and the photos imprinted, it is rendered fit to be screened in a cinema theatre, then such a change would come within the meaning of the term treating or adapting any article or substance with a view to its use.
(13) Composing is a necessary part of printing process and hence it is a manufacturing process. It cannot be said that the definition should be confined to the process by which impression is created on the paper and to no other process preceding or succeeding the marking of the impression on the paper to be printed. Everything that is necessary before or after complete process, would be included within the definition of the word ‘manufacturing process’. The definition takes in all acts which bring in not only some change in the article or substance but also the act done for the protection and maintenance of such article by packing, oiling, washing, cleaning, etc. (P.Natrajan v. E.S.I. Corporation (1973) 26 FLR 19).
(14) Preparation of food and beverages and its sale to members of a club (CCI v. ESIC, 1992 LAB IC 2029 Bom.).
(15) Receiving products in bulk, in packing and packing as per clients requirements (LLJ I 1998 Mad. 406).
(16) Construction of railway – use of raw materials like sleepers, bolts, loose rails etc. to adaptation of their use for ultimately for laying down railway line (LAB IC 1999 SC 407; Lal Mohmd. v. Indian Railway Construction Co. Ltd.).
(ii) What is not a manufacturing process
No definite or precise test can be prescribed for determining the question whether a particular process is a manufacturing process. Each case must be judged on its own facts regard being had to the nature of the process employed, the eventual result achieved and the prevailing business and commercial notions of the people. In deciding whether a particular business is a manufacturing process or not, regard must be had to the circumstances of each particular case. To constitute a manufacturing process, there must be some transformation i.e. article must become commercially known as something different from which it acquired its existence.
Following processes are not manufacturing processes:
(1) Exhibition of films process.
(2) Industrial school or Institute imparting training, producing cloth, not with a view to its sale.
(3) Receiving of news from various sources on a reel in a teleprinter of a newspaper office, is not a manufacturing process in as much as news is not the article or substance to which Section 2(k)(i) has referred.
(4) Any preliminary packing of raw material for delivering it to the factory (AIR 1969 Mad. 155).
(5) Finished goods and packing thereof: F. Hare v. State AIR 1955, 2710.