2003 (3) TMI 465 - AT - Central Excise

Manufacturer prevails in CEGAT case on exemption for Acid Slurry in manufacturing.

The Appellate Tribunal CEGAT, Chennai ruled in favor of the manufacturer in a case where the Revenue appealed against the extension of benefits under ... Scope of exemption under Notification No. 227/77-C.E. where no process is ordinarily carried on with the aid of power - use of power in the manufacture of raw material not imputable to manufacture of final product - excisability and classification of intermediate inputs - effect of manufacture of intermediate in a separate factory and transfer on payment of dutyScope of exemption under Notification No. 227/77-C.E. where no process is ordinarily carried on with the aid of power - use of power in the manufacture of raw material not imputable to manufacture of final product - effect of manufacture of intermediate in a separate factory and transfer on payment of duty - Whether the respondent-manufacturer of scouring powder was entitled to exemption under Notification No. 227/77-C.E. despite Acid Slurry (an excisable intermediate manufactured with the aid of power in a separate factory and supplied to the scouring-powder unit on payment of duty). - HELD THAT: - The Tribunal accepted the Commissioner (Appeals) finding that scouring powder was manufactured without use of power and that Acid Slurry, though an excisable product classifiable under Heading 3402.90, was produced in a separate factory and cleared to the scouring-powder unit on payment of duty. Reliance was placed on precedents holding that use of power in the manufacture of a raw material cannot be treated as use of power in the manufacture of the final product. Applying that principle, and noting that Acid Slurry was not manufactured in the same factory as the scouring powder (a fact admitted in the impugned order and not disputed by Revenue), the Tribunal held that the use of power in producing the intermediate does not disentitle the final product to the benefit of the notification where the final product's processes are ordinarily carried on without the aid of power. [Paras 2, 3]The exemption under Notification No. 227/77-C.E. was correctly extended to the scouring powder; Revenue's appeal is rejected.Final Conclusion: Appeal dismissed; benefit of Notification No. 227/77-C.E. upheld for the scouring powder by reason that power used in manufacture of an excisable intermediate produced in a separate factory and cleared on payment of duty does not constitute use of power in the manufacture of the final product. The Appellate Tribunal CEGAT, Chennai heard a case where the Revenue appealed against the extension of benefits under Notification No. 227/77-C.E. to a manufacturer of scouring powder. The Tribunal ruled in favor of the manufacturer, stating that the use of power in manufacturing raw materials like Acid Slurry does not disqualify the final product from the exemption, citing relevant precedents. The appeal by the Revenue was rejected.