K. R. DIXIT, J. M.: This appeal involves question whether assessee is engaged in manufacturing of any article. assessee had claimed investment allowance and hence this question. assessee collects large quantity of what is known s spent caustic lye from textile mills. textile mills purchase what is knows as caustic liquor having 97 per cent to 98 per cent purity for mercerising of cotton fabrics. They dilute it to 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 contains about 4 per cent to 8 per cent concentration of caustic material and also impurities like cotton fluffy fibres-sizing materials, colour and chemicals etc. which is known as spent caustic lye. assessee after collecting this spent caustic lye, purifies it by sedimentation , setting, evaporation etc., which raises concentration of caustic material to 30 per cent to 40 per cent. This then again be comes caustic lye usable by mills. ITO granted assessee s claim but CIT in his revision order directed ITO to withdraw investment allowance. material part of his order is as follows: "The assessee in fact does not manufacture caustic soda. It simply undertakes process by which caustic soda which is already there in mix is got from mercerising waste of textile mills. In order to manufacture caustic soda what is required to be done is to mix ingredients of caustic soda and thus manufacture it. In case of assessee caustic soda is already there in mix and through certain pries which is not manufacturing process it extricates caustic soda from mix." On behalf of assessee, ld. counsel stated that assessee makes caustic lye form waste material thus converting it into usable article. He relied upon following authorities: (i) Dy. Commor. of ST vs. M/s Pio food Packers AIR 1980 SC 1227 (ii) Chowgule & Co. vs. Union of India AIR 1981 SC 1014 (iii) Idandas vs. Anant Ramchandra Phadke AIR 1982 SC 127 he also argued that in salt manufacturing same process of sedimentation and evaporation are involved and so here also activity of assessee should be considered as manufacturing ld. Departmental Representative on other hand argued that although there might be change in material handled by assessee it may not amount to manufacture because every change is not manufacture. He relied upon following authorities: (i) Chowgule & Co. vs. Union of India (supra) (ii) Tyreage (P) Ltd. vs. ITO (1983) 12 TAXMAN 47 (Bom-Trib). To our mind it is not necessary to enter into detailed discussion of all authorities cited above. law on point is fairly well settled now. test of manufacture is that activity must result in new article having distinctive name , character and use. This is well known test laid down by Supreme Court in old case in Union of India. vs. Delhi Cloth and General Mills Ltd. AIR 1963 SC 791. In this case spent caustic lye which assessee gets form mills is converted into liquid of much higher concentration i.e., form 7 per cent to 8 per cent to 30 per cent to 40 per cent. spent lye could not be used by mills for mercerising but caustic lye made by assessee can be so used. Secondly if mill wanting this material for mercerising were to ask for it in market and were offered spent lye. they would not take it because it is different commodity in market. difference in concentration is such that character of material also is changed. Therefore, new material is having distinctive name, character and use. Thus test laid down in Delhi Cloth Mills (supra) is satisfied. What is peculiar to this case that process involved is very simple, namely. sedimentation, evaporation, etc., and it is that simplicity of process which creates misunderstanding of absence of manufacturing. But indicting this question we are not concerned with simplicity of process but with result thereof. if we look at result and ignore intermediate step of processes, an were is clear. In Tyreage (P) Ltd. (supra) Tribunal Bombay Bench held that retreading of old tyre did not bring into being commercially different article although it improved performance and serviceability of tyres. It held that tyre remained tyre and it was not called manufacturing although retreating may be process more difficult and requiring machinery than evaporation and sedimentation as in this case. That case is consistent with above reasons that intermediate step of processing is not material, however, complicated that process may be if result does not satisfy test in case of Delhi Cloth Mills (supra) i.e., no new article is produced, there is no manufacturing. For above reasons, we hold that assessee was engaged in manufacturing activity and thus entitled to investment allowance. In result appeal is allowed. *** ALCHEMIC PRIVATE LTD v. INCOME TAX OFFICER