Tribunal Rules: Grinding Slag Not Manufacturing, No New Commodity Created; Appeal Allowed, Relief Granted.

The tribunal ruled in favor of the appellant, concluding that grinding Granulated Blast Furnace Slag (GBS) into Ground Granulated Blast Furnace Slag (GGBS) does not constitute a manufacturing process. The tribunal emphasized that there was no chemical change or alteration in the character of the slag, thus it remains the same product. Consequently, the tribunal set aside the impugned order and allowed the appeal, granting any consequential relief. This decision was grounded in the principle that a mere physical change, without altering the essential characteristics of the product, does not create a new commodity.

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Issues:
Classification of Ground Granulated Blast Furnace Slag (GGBS) under CSH 2618.00 and confirmation of demands for the period 23-7-1996 to 2/2000.

Analysis:
The appeal involved the question of whether the process of grinding Granulated Blast Furnace Slag (GBS) to produce GGBS constitutes the creation of a new product and if it should be classified under a different heading. The appellant argued, supported by numerous legal precedents, that a mere physical change does not amount to the emergence of a new product. They cited cases like CCE v. Coimbatore Pioneer Fertilisers Ltd. and Sandoz (I) Ltd. v. UOI to support their position. On the other hand, the respondent contended that crushing stones into smaller sizes amounts to manufacture, referencing the decision in Hindustan Construction Co. Ltd. v. CCE, Chandigarh. However, the appellant highlighted the reversal of this ratio by the Apex Court in State of Maharashtra v. Mahalaxmi Stores, where it was held that crushing boulders into smaller size Gitti does not constitute a manufacturing process.

Upon careful examination of the cited judgments, the tribunal concluded that the grinding of GBS into GGBS does not amount to a manufacturing process. They emphasized that there is no chemical change or alteration in the character of the slag during this process, and hence, the slag remains the same. The tribunal noted that for a change to be considered significant, it should impact the name, character, and use of the commodity. They referenced cases like Iswar Grinding Mills v. CCE and Alchemie Pvt. Ltd. v. CCE to support their decision, where similar transformations were not deemed as manufacturing processes. As there was no change in the character or use of the product in this case, the tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with any consequential relief.

In conclusion, the tribunal's decision was based on the principle that a mere physical change, without altering the essential characteristics of the product, does not result in the creation of a new commodity. The judgment highlighted the importance of considering the impact on the name, character, and use of the product to determine if a manufacturing process has occurred.

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