Reconditioning of old kiln shells is not manufacture, so central excise duty could not be sustained.

Reconditioning and reprocessing of old kiln shells did not amount to manufacture for central excise purposes. The Tribunal applied the settled principle that repair, reprocessing or reconditioning of old and used goods does not create a new excisable product, even where the processed goods conform to prescribed specifications. Because the received kiln shells were only reconditioned and the factual position was undisputed, the excise demand could not be sustained. The demand was therefore held unsustainable.

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Issues: Whether reconditioning and reprocessing of old kiln shells amounts to manufacture so as to attract central excise duty.

Analysis: The old kiln shells were received for reprocessing and reconditioning, and this factual position was not disputed. The demand was sustained below on the view that the process brought into existence a new product conforming to ISI specifications. The Tribunal applied the settled principle that reprocessing or reconditioning of old and used goods does not amount to manufacture, relying on prior authority holding that such repair or reconditioning activity does not create a new excisable product.

Conclusion: Reconditioning of the old kiln shells did not amount to manufacture, and the duty demand was unsustainable.

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