Excise duty on distinct manufactured commodities: later processing of milk powder did not erase liability on the earlier product.

Whole milk powder made from natural milk was treated as a distinct excisable product and remained chargeable to central excise duty under Tariff Item 1B. The later conversion of time-expired whole milk powder into regenerated fluid milk, and then into skimmed milk powder and butter, involved separate manufacturing stages producing different marketable commodities. Regenerated fluid milk was either an intermediate product not exigible to duty or, if treated as a final product, covered by Notification No. 185 of 1975 dated 30 August 1975. That later duty position did not relieve liability arising from the earlier manufacture of whole milk powder.

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Issues: Whether central excise duty was payable on whole milk powder produced from natural milk, and whether the duty already paid or payable on skimmed milk powder and butter produced later from regenerated fluid milk relieved the petitioner from liability on the whole milk powder.

Analysis: Whole milk powder was held to be a distinct excisable product manufactured from natural milk by one mechanical process and, as such, fell under Tariff Item 1B in the First Schedule to the Central Excises and Salt Act, 1944. The later conversion of time-expired whole milk powder into regenerated fluid milk and then into skimmed milk powder and butter involved separate manufacturing stages producing different marketable commodities. The regenerated fluid milk was treated either as an intermediate product not exigible to duty or, if regarded as a final product, as covered by Notification No. 185 of 1975 C dated 30th August 1975. That did not affect the duty liability on the earlier manufacture of whole milk powder.

Conclusion: The petitioner remained liable to pay central excise duty on whole milk powder, and the contention that duty on later products displaced that liability was rejected.

Ratio Decidendi: Excise duty is attracted to each distinct manufacturing event that brings into existence a separate marketable commodity, and duty on a later product does not extinguish liability on an earlier excisable product.

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