1983 (2) TMI 280 - AT - Central Excise

Pyrites Crushing Not Manufacturing: Tribunal Rules in Favor of Mining Company

The tribunal upheld the Central Board of Excise and Customs' decision, ruling in favor of the mining company respondents in a dispute over the ... - Issues:1. Interpretation of Central Excise Tariff Item No. 68 and applicability to the mining and crushing of pyrites.2. Determination of whether the process of crushing pyrites constitutes 'manufacture' under the Central Excises and Salt Act, 1944.Analysis:1. The case involved a dispute regarding the classification of pyrites as excisable goods under Central Excise Tariff Item No. 68. The respondents, a mining company, argued that the pyrites they mined and crushed did not qualify as excisable goods as they were not manufactured in a factory as defined under the Factories Act, 1948. The department contended that the crushing process constituted manufacture and the resulting product was marketable as a soil stabilizer, falling under Tariff Item No. 68. The tribunal analyzed the legislative background and evidence presented, ultimately holding that the pyrites remained unchanged chemically after crushing, meeting the criteria set by the Supreme Court in a previous case. Therefore, the tribunal upheld the Central Board of Excise and Customs' decision, ruling in favor of the respondents.2. The second issue revolved around whether the process of crushing pyrites amounted to 'manufacture' under the Act. The department argued that the crushing and sieving process transformed the pyrites into a new product, making it marketable as a soil stabilizer. However, the tribunal determined that no new product emerged from the process, as the chemical composition of the pyrites remained the same. Additionally, the tribunal found that the premises where the crushing took place did not qualify as a factory under the Factories Act, but rather as part of the mine under the Mines Act, 1952. This finding led to the conclusion that the process did not constitute manufacture, and therefore, the duty of excise under Tariff Item No. 68 was not applicable. Consequently, the tribunal dropped the proceedings initiated by the Central Government and vacated the stay order issued.In conclusion, the tribunal's detailed analysis of the legislative provisions, case law, and factual evidence led to the determination that the mining and crushing of pyrites by the respondents did not amount to the manufacture of excisable goods under the Central Excises and Salt Act, 1944. The judgment highlighted the importance of maintaining the chemical composition of the product and the location of the processing premises in determining the applicability of excise duty.