Recovery of spent solvents is not manufacture unless a new product emerges with distinct identity and use.

Recovered spent solvents and waste methanol, after purification and reuse, were held not to be excisable goods because they were only recovered material that had already been used in manufacture and had not emerged as a new product with a distinct name, use and character. Mere purification or concentration of an already used chemical was treated as insufficient to constitute manufacture. The Tribunal also noted that the burden to establish manufacture and dutiability lay on the Revenue, which had produced no fresh evidence to show that the recovered material was a new excisable product. On that basis, the duty demand, interest and penalties were held unsustainable.

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Issues: Whether purified spent solvents or waste methanol, after recovery and reuse, amounted to excisable goods and whether the demand of duty, interest and penalties could be sustained.

Analysis: The Tribunal found that the spent solvents had already been used in manufacture and, after further purification, were only recovered material that had lost value and was not a new product. Applying settled principles that manufacture requires emergence of a product with a distinct name, use and character, the Tribunal held that mere purification or concentration of an already used chemical does not amount to manufacture. It further noted that the burden to prove manufacture lay on the Revenue, which had not produced fresh evidence to show that the recovered material was dutiable as a new excisable product. On that basis, the Tribunal accepted the view that the duty demand, interest and penalties were not sustainable.

Conclusion: The recovered spent solvents and waste methanol were not excisable goods and the Revenue appeals failed.

Ratio Decidendi: Recovery or purification of spent material does not amount to manufacture unless it results in a new product with a distinct name, use and character, and the burden to prove manufacture rests on the Revenue.

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