1. This appeal involves the question whether the assessee is engaged in manufacturing of any article. The asses-see had claimed investment allowance and hence this question. The assessee collects large quantity of what is known as 'spent caustic lye' from the textile mills. The textile mills purchase what is known as caustic liquor having 97 per cent to 98 per cent purity for mercerising of cotton fabrics. They dilute it to a strength of 30 per cent to 40 per cent and use it for mercerising cotton cloth. This cloth is then washed in water and this water then contains about 4 per cent to 8 per cent concentration of the caustic material and also impurities like cotton fluffy, fibres-sizing materials, colour and chemicals, etc., which is known as spent caustic lye. The assessee after collecting this spent caustic lye, purifies it by sedimentation, settling, evaporation, etc., which raises the concentration of the caustic material to 30 per cent to 40 per cent.
This then again becomes caustic lye usable by the mills.
2. The ITO granted the assessee's claim but the Commissioner in his revisional order directed the ITO to withdraw the investment allowance.
The material part of his order is as follows: The assessee in fact does not manufacture caustic soda. It simply undertakes a process by which caustic soda which is already there in the mix is got from the mercerising waste of textile mills. In order to manufacture caustic soda, what is required to be done is to mix the ingredients of caustic soda and thus manufacture it. In the case of the assessee the caustic soda is already there in the mix and through a certain process which is not a manufacturing process, it extricates the caustic soda from the mix.
3. On behalf of the assessee, the learned Counsel stated that the assessee makes caustic lye from the waste material thus converting it into usable article. He relied upon the following authorities: Dy. CST v. Pio Food Packers AIR 1980 SC 1227, Chowgule & Co. (P.) Ltd. v. Union of India AIR 1981 SC 1014 and Idandas v. Anant Ramchandra Phadke AIR 1982 SC 127.
He also argued that in salt manufacturing the same process of sedimentation and evaporation are involved and so here also the activity of the assessee should be considered as manufacturing.
4. The learned departmental representative, on the other hand, argued that although there might be change in the material handled by the assessee, it may not amount to manufacture because every change is not manufacture. He relied upon the following authorities--Chowgule & Co.
(P.) Ltd.'s case (supra) and Tyreage (P.) Ltd. v. ITO  12 Taxman 47 (Bom. - Trib.).
5. To our mind it is not necessary to enter into the detailed discussion of all the authorities cited above. The law on the point is fairly well settled now. The test of manufacture is that the activity must result in a new article having distinctive name, character and use. This is well known test laid down by the Supreme Court in the old case in Union of India v. Delhi Cloth & General Mills Co. Ltd. AIR 1963 SC 791. In this case spent caustic lye which the assessee gets from the mills is converted into a liquid of much higher concentration, i.e., from 7 per cent to 8 per cent to 30 per cent to 40 per cent. The spent lye could not be used by the mills for mercerising but the caustic !ye made by the assessee can be so used. Secondly, if a mill wanting this material for mercerising were to ask for it in the market and were offered spent lye, they would not take it because it is a different commodity in the market. The difference in the concentration is such that the character of the material also is changed. Therefore, the new material is having a distinctive name, character and use. Thus, the test laid down in Delhi Cloth & General Mills Co. Ltd.'s case (supra) is satisfied. What is peculiar to this case that the process involved is very simple, namely, sedimentation, evaporation, etc., and it is that simplicity of the process which creates a misunderstanding of absence of manufacturing. But in deciding this question, we are not concerned with the simplicity of the process but with the result thereof. If we look at the result and ignore the intermediate step of the process, the answer is clear. In Tyreage (P.) Ltd.'s case (supra), the Tribunal, Bombay Bench, held that the retreading of old tyre did not bring into being a commercially different article although it improved the performance and serviceability of the tyres. It held that tyre remained a tyre and it was not called manufacturing although the retreading may be a process more difficult and requiring the machinery than evaporation and sedimentation as in this case. That case is consistent with the above reasons that the intermediate step of processing is not material. However complicated that process may be, if the result does not satisfy the test in the case of Delhi Cloth & General Mills Co. Ltd. (supra), i.e., no new article is produced, there is no manufacturing. For the above reasons, we hold that the assessee was engaged in manufacturing activity and, thus, entitled to the investment allowance.