Customs, Excise and Gold Tribunal - Mumbai
New Sharrock Mills vs Commissioner Of Central Excise on 13 September, 2005
Equivalent citations: 2005(190)ELT35(TRI-MUMBAI)
ORDER Archana Wadhwa, Member (J)
1. Both the appeals, one filed by the appellant and other by the Revenue are being disposed off by a common order as they arise out of the same impugned order passed by Commissioner (Appeals), vide which, on one hand, he has rejected the appellant's refund claim on merits and on the other hand remanded the matter to the original adjudicating authority for re-examination of the claim on the point of unjust enrichment on the ground that the goods, in respect of which refund claim was made, were being used captively in the process of textiles and there was no stage of passing on the burden of duty to the customer.
2. We have heard Shri Prakash Shah, ld. Counsel for the appellant and Shri Hitesh Shah, ld. DR for the Revenue.
3. As per facts on record, appellants are using duty paid caustic soda for mercering of fabrics. Such use of caustic soda results in emergence of spent caustic soda lye. The same is re-cycled and caustic soda is recovered, which again is used for mercering of fabrics. The undisputed process of recovery of caustic soda from spent caustic soda lye is by giving heat to the same by process of steam and thereby removing excess water and increasing the concentration from 4.6 % approximate to around 20%. Such caustic soda recovered from spent caustic soda lye was exempt in terms of Notification No. 191/68-Central Excise dated 9-11-1968 and as such, no duty was being paid on the same. The said notification was rescinded with effect from 1-3-1994 vide Notification No. 86/94 and thereafter the appellant started paying duty thereon. However, subsequently, on realizing that the process carried out by them does not amount to manufacture, they filed claim for refund of duty paid on the same during the period 1-5-1995 to 31-8-1995. The said refund claim stands rejected by the authorities below on the ground that recovery of caustic soda from spent caustic soda lye is a manufacturing process and inasmuch as notification exempting the same was withdrawn, duty has been correctly paid by them.
4. The appellants main contention is that the process of concentration by evaporation of water cannot be held to be process of manufacture so as to make recovered caustic soda liable to duty. Mere existence of Notification No. 191/68-Central Excise, upto a certain period and subsequent withdrawal by the same will not, by itself, confer the status of manufacture to the recovery process, if the same cannot be independently considered as manufacture. It has also been argued that they started with caustic soda and through the intermediate process of emergence of spent caustic soda lye, recovered caustic soda only. As such, the starting material and the final material being the same i.e. caustic soda, it cannot be said that any manufacture resulting in emergence of new product has taken place. It is their contention that caustic soda recovered from the lye is already duty paid caustic soda received by them initially. For the above proposition, reliance has been placed upon various decisions of the judicial as also quasi judicial authorities.
5. We find that an identical issue arose before the Tribunal in the case of Alchemie Pvt. Ltd. v. Commissioner reported in 2000 (117) E.L.T. 745 and the Tribunal after taking note of the earlier two decisions in the case of Commissioner, Central Excise v. Bakul Aromatics & Chemicals Ltd. - 1989 (43) E.L.T. 758 and S.D. Fine Chemicals Pvt. Ltd. v. Commissioner, Central Excise - 1997 (91) E.L.T. 610, held that as the resultant product has the same characteristics except for the concentration, it is not possible to say that change in concentration would result in emergence of new product. Similarly in the case of Commissioner v. Yash Pharma Chemicals (Bombay) Pvt. Ltd. - 2001 (135) E.L.T. 1206 (Tri. - Del.) it was held, after taking note of the precedent decisions that howsoever elaborate the process undertaken is, the test for determination whether manufacture has taken place or not in the sense, Central Excise law is whether new products having different name, use and character has come into existence or not. Accordingly, the process of recovery of tartaric acid from L2 ABT was held as not manufacturing process as tartaric acid was already present in initial product L2 ABT and the entire process was originally started with the product Tartaric acid. By applying the above tests to the present case, we are of the view that the recovery process undertaken by the appellant by increasing the concentration of spent caustic soda lye does not amount to manufacture inasmuch caustic soda itself was the initial product used for mercering the fabrics. No new product different and distinct from the initial product can be said to have been emerged.
6. The reasoning of the lower authorities that the existence of notification exempting the product is conclusive to show that the product was excisable and as such, has correctly discharged duty burden, on exemption being withdrawn, does not appeal to us in as much, the product for being held as excisable, needs to satisfy the basic criteria of manufacture. The Hon'ble Supreme Court in the case of U.O.I. v. Ahmedabad Electricity Company - as held 'cinder' as 'non-excisable' even though cinder was mentioned as one of the exempted product in Notification No. 76/86-Central Excise dated 10-2-1986. Similarly in the case of Commissioner v. Markfed Vanaspati and Allied Industries -2003 (153) E.L.T. 491 (S.C.) it was observed that mere mention of a product in tariff entry is no ground for holding the same to be manufactured and the onus to prove manufacture is on the Revenue. We do not find any evidence produced by the Revenue to discharge such burden except referring to the notification. Having held that there is no manufacturing activity involved, we do not find existence of notification as of any consequence so as to hold otherwise.
7. The Hon'ble Supreme Court decision in the case of Jaiprakash Industries Ltd. relied upon by the ld. SDR is not applicable to the facts of the case and the same deals with the issue of crushing of boulders into smaller stones and bajari by the mechanical process. Similarly, we find that the issue before the Tribunal in the case of Amrit Chemicals - 1990 (45) E.L.T. 282, referred to by ld. DR was as regards interpretation of Notification No. 113/74, dated 20-7-1994 in respect of recovery of caustic soda from spent caustic soda lye and the issue of 'manufacture' was never raised. As such, the Tribunal did not have the occasion to deal with this aspect and granted relief on the basis of applicability of notification.
8. In view of our foregoing discussion we hold that caustic soda recovered from spent caustic soda lye was not excisable and duty was not required to be paid. However, the refund of duty already paid, is to be examined in the light of the amended provisions of Section 11B relatable to unjust enrichment, which would be applicable even though the caustic soda was consumed captively, as clarified by the Hon'ble Supreme Court in the case of Union of India v. Solar Pesticides, .
9. Both the appeals are disposed off accordingly.
(Pronounced in Court on 13-9-2005.)