1993 (11) TMI 201 - AT - Central Excise

Appeal partly allowed on Notification benefits for 'Thermit Portion' and 'Ferro Alloys'

COLLECTOR OF CENTRAL EXCISE, KANPUR Versus INDIAN THERMIT CORPN. LTD.

COLLECTOR OF CENTRAL EXCISE, KANPUR Versus INDIAN THERMIT CORPN. LTD. - 2004 (175) E.L.T. 731 (Tri. - Del.) Issues Involved:1. Applicability of Notification No. 179/77 and No. 118/75 to 'Thermit Portion', 'Ferro Alloys', and 'Togo Tenex'.2. Determination of whether the use of power in the manufacturing process disqualifies the goods from the benefit of the notifications.Issue-wise Detailed Analysis:1. Applicability of Notification No. 179/77 and No. 118/75 to 'Thermit Portion':The assessees claimed that 'Thermit Portion' was manufactured manually without using power, thus qualifying for the exemption under Notification No. 179/77. The ingredients of 'Thermit Portion' included Aluminium Granules, Mill Scale, Ferro Manganese, and Nail Chippings. The Aluminium Granules were manufactured using power, but the assessees contended that no new product came into existence under Section 2(f) of the Central Excises & Salt Act, 1944. Mill Scale was heated to remove impurities, and Ferro Manganese, purchased from the market, was also used. The Collector (Appeals) held that the mixing of these items was done manually without power, and the manufacturing processes of the raw materials were distinct and commercially identifiable. Therefore, the benefit of Notification No. 179/77 was correctly extended to 'Thermit Portion'.2. Applicability of Notification No. 179/77 and No. 118/75 to 'Ferro Alloys':The assessees argued that 'Ferro Alloys' were manufactured by manually mixing Aluminium powder with other raw materials purchased from the market. Although Aluminium powder was manufactured using power, it was a duty-paid, marketable commodity. The Collector (Appeals) agreed that the manual mixing of these ingredients without power qualified for the exemption under Notification No. 179/77. Additionally, the benefit of Notification No. 118/75 was extended to Roasted and Sieved Mill Scale and Aluminium powder used in 'Ferro Alloys' as they were separate and distinct commercial commodities liable for duty when cleared as such.3. Applicability of Notification No. 179/77 to 'Togo Tenex':'Togo Tenex' was manufactured using an oil furnace with an electrically operated blower for quick burning. The Collector (Appeals) did not provide a specific finding for 'Togo Tenex'. However, the Tribunal held that the use of an electric blower for quick burning constituted a process incidental and ancillary to the completion of the manufacture. Therefore, 'Togo Tenex' was not entitled to the benefit of Notification No. 179/77.4. Determination of whether the use of power in the manufacturing process disqualifies the goods from the benefit of the notifications:The Revenue contended that the use of power in the initial stages of manufacturing Aluminium Granules and Mill Scale should disqualify the final products from the exemption. However, the Tribunal held that since the ingredients were independent, duty-paid, marketable commodities, the manual mixing process without power for the final products 'Thermit Portion' and 'Ferro Alloys' qualified for the exemption. The Tribunal relied on the Supreme Court's interpretation in the case of Rajasthan State Chemical Works, which clarified that the use of power in any process integrally connected to the manufacture disqualifies the exemption. However, in this case, the final mixing process was manual, and the ingredients were already duty-paid.Conclusion:The appeal was partly allowed. 'Thermit Portion' and 'Ferro Alloys' were entitled to the benefit of Notification No. 179/77, while 'Togo Tenex' was not. The benefit of Notification No. 118/75 was also extended to the Roasted and Sieved Mill Scale and Aluminium powder used in 'Ferro Alloys'.