Customs, Excise and Gold Tribunal - Delhi
T.P. Mineral (P) Ltd. vs Collector Of Central Excise on 21 May, 1987
Equivalent citations: 1988(19)ECR129(TRI.-DELHI), 1989(40)ELT149(TRI-DEL)
ORDER V.P. Gulati, Member (T)
1. This is an appeal against the order of the Collector (Appeals) of Central Excise, Calcutta.
2. Brief facts of the case are that the appellants manufacture Graphite Flakes out of Graphite Ore. The process of manufacture as set out in the order of the Collector (Appeals) is as under :
"The graphite ore is grinded in a mill grinder and the grinded powder is put into a container containing water and kerosene mixed together. The graphite portion floats on the surface with the support of the kerosene oil and other materials like mud, sand and other things fall to the bottom. The graphite material is collected and dried again either in sun or in a coal fired oven."
The main plea before the Collector (Appeals) was that this processing of the graphite ores for getting graphite flakes did not amount to manufacture. Before the adjudicating authority they took the plea that graphite flakes produced by them were a natural product obtained by processing of ores. According to them they were not required to take any licence nor they were required to pay any duty under T.I. 68. The original authority, however did not accept their plea and held that the graphite manufactured was liable to duty under T.I. 68 and also levied a penalty of Rs.25/- taking a lenient view as the appellants had produced only a small quantity as a part of a trial production. In appeal before us, the learned Consultant for the appellants has maintained that the material graphite powder obtained by them by processing the ores was natural graphite and the processing of the ore did not amount to manufacture. He however did not elaborate his arguments in this regard and made a fresh plea, not taken earlier before the lower authorities, that the appellants are eligible for the benefit of notification No. 23/55 as amended. Being a legal plea there was no objection from the learned JDR in this regard and he was allowed to take this plea before us. He read out the said notification and the same is reproduced below for convenience of reference:
"Notification No. 23/55 dated 29.4.1955 as amended by Notification No. 27/73-C.E., dated 1.3.1973, 14/75-C.E., dated 1.3.1975 and 103/75-C.E., dated 30.4.1975 :
In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 the Central Government hereby exempts the following items from the whole of the duty leviable thereon under Section 3 of the Central Excises & Salt Act, 1944 namely :
(1) Minerals, employed either as extenders, suspending agents or fillers or as diluents namely: -
Barytes, Bauxite, China Clay, Celestite, Limestone and Chalk (including precipitated chalk, Fuller's earth, Gypsum, Mica, Silica, Asbestine, Talc and Slate (2) Natural black minerals, namely -
Graphite, Ilmenite black and Manganese Dioxide (3) Omitted (4) Oxide of iron pigments -- all colours, natural and synthetic (5) Soluble Prussian Blue (A washing blue) (6) Omitted (7) Anti-fouling Toxics, namely :
Arsenic Oxide, Oxide of Mercury, Sub-oxide of Copper."
He drew our attention to serial No. 2 of the Notification referred to above under which the graphite was exempted from payment of duty. He pointed out that there was no condition in the notification in regard to the exemption in respect of graphite. He pleaded in view of this notification that there was no question of any duty demand for the graphite produced by the appellants.
3. We observe by claiming this benefit, the appellants have conceded that what they are producing are goods for the purpose of Central Excise levy and the process to which graphite ore is subjected tantamounts to manufacture.
4. Smt. J.K. Chander, JDR, stated in view of the claim made in respect of this exemption notification, she has no plea to make so far as the levy of duty is concerned. Shri Gopal Prasad also pleaded that under Rule 174A of the Central Excise Rules read with Notfn. 112/78, since the goods were exempted, no licence was required to be taken and therefore no penalty was leviable for manufacture of goods without a licence. Smt. Chander also had no plea to make in this regard.
5. We observe that the graphite is covered under serial No. 2 of Notfn. 23/55 as amended from time to time and as pointed out by the learned Consultant for the appellants, the exemption in respect of graphite is not a conditional one and this exemption therefore would be available in respect of graphite in the form in which it is produced.
6. In view of this, therefore, we hold that the duty demanded from appellant is not maintainable in law. "So far as the licensing aspect is concerned inasmuch as the goods are exempted from payment of duty no licence is required to be obtained. In this view of the matter no violation of licensing provisions is involved and therefore no penalty is leviable under Rule 173Q of the Central Excise Rules. The order of levy of penalty is, therefore, set aside."
7. Since we have allowed the appeal in the above terms we are not giving our findings in regard to the other points raised. In this context we also observe that the learned Consultant for the appellants has not pressed the point as to whether the processing of the ore for the production of Graphite by the appellants constitutes manufacture and whether any goods with different name and character and use came into existence by the said processing.