2002 (12) TMI 511 - AT - Central Excise

Tribunal: Filling duty-paid oxygen not 'manufacture' pre-1-3-97. No distinct product emerged.

SKY OXYGEN Versus COMMISSIONER OF C. EX. & CUSTOMS, VADODARA

The Tribunal ruled that filling duty paid oxygen into cylinders did not amount to 'manufacture' for central excise duty purposes prior to 1-3-97. The ... Manufacture Issues:Whether filling duty paid oxygen into cylinders received through pipeline amounts to 'manufacture' attracting central excise duty for the period prior to 1-3-97.Analysis:The appellant contested the demand for central excise duty for the period from 1-4-93 to 1-3-97, arguing that filling cylinders with oxygen gases did not attract duty. The appellant filed a classification list under the Central Excise Rules, 1944, and paid duty under protest. The classification of oxygen under different sub-headings in the Schedule to the Central Excise Tariff Act, 1985 was highlighted. The appellant argued that a change in the tariff entry did not automatically make oxygen dutiable unless it transformed the goods into a new commodity. Citing Supreme Court decisions and a Tribunal ruling, the appellant contended that no transformation occurred when filling oxygen into cylinders from a pipeline.The insertion of Chapter Note 10 in Chapter 28 by an amendment effective from 1-3-97 was crucial. The note stated that certain treatments, including repacking from bulk packs to retail packs, would amount to 'manufacture.' However, the Tribunal concluded that filling gaseous oxygen into cylinders did not involve a manufacturing process as per the Supreme Court decisions referenced earlier. It was determined that no distinct product emerged from this activity, leading to the finding that the appellant was not engaged in manufacturing and, therefore, not liable for duty. Consequently, the Tribunal set aside the impugned order and allowed the appeal.In conclusion, the judgment focused on whether the activity of filling duty paid oxygen into cylinders constituted 'manufacture' for central excise duty purposes. The analysis delved into the classification of oxygen, the legal interpretations of relevant tariff entries, and the application of Chapter Note 10 in Chapter 28. By referencing past judicial decisions, the Tribunal determined that no manufacturing process occurred during the activity in question, leading to the decision to set aside the duty demand and allow the appeal.