2004 (9) TMI 425 - AT - Central Excise

CESTAT rules purification process not subject to excise duty

INDIAN CHEM-PORT Versus COMMISSIONER OF CENTRAL EXCISE, VADODARA

The Appellate Tribunal CESTAT, Mumbai held that the purification process of chemicals bought from the market by the appellants did not result in the ... Manufacture Issues:Determining whether the process of purifying chemicals bought from the market results in the manufacture of a new excisable commodity liable to excise duty.Analysis:The main issue in the appeals before the Appellate Tribunal CESTAT, Mumbai was whether the purification process of chemicals purchased from the market constitutes the manufacture of a new excisable commodity subject to excise duty. The appellants purchased duty paid inorganic/organic compounds containing impurities, which they purified through processes like distillation, crystallization, solvent extraction, and filtration. The Tribunal referred to the case of S.D. Fine Chem. (Pvt.) Ltd. v. CCE, where it was held that marginal purification of chemicals does not result in a new commercial commodity with a distinct name, character, or use. This precedent was deemed directly applicable to the present case as there was no evidence of a new product emerging from the purification process. Additionally, the Tribunal distinguished the case of Allipo Chemicals v. CC&CE, where a new product (I.P. grade chemical) emerged from the purification process, unlike the situation in the current appeals. Therefore, the Tribunal concluded that the Commissioner (Appeals) erred in remanding the cases for re-examination without sufficient grounds and set aside the impugned order, ruling in favor of the appellants.In conclusion, the Appellate Tribunal CESTAT, Mumbai decided that the purification process of chemicals bought from the market by the appellants did not result in the manufacture of a new excisable commodity liable to excise duty. By applying relevant precedents and distinguishing cases where new products emerged from purification, the Tribunal held that the purification process undertaken by the appellants did not lead to the creation of a distinct commercial commodity. Consequently, the appeals were allowed, and the decision of the Commissioner (Appeals) to remand the cases was overturned.