Integrated manufacturing process defeats exemption where steam and power are used in production, with demand limited by time bar.

A prior appellate order did not bar the Department from re-examining the exemption claim where the manufacturing process had materially changed, and the demand was confined to the permissible limitation period. On the exemption issue, soap manufacture was treated as an integrated process in which steam heating and power-driven pumping formed part of manufacture itself; those operations were not mere post-manufacturing activity. As a result, exemption under Notification No. 28/64-C.E. was unavailable because the process used steam or power in the production of the final excisable product, and duty remained payable within the restricted period.

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Issues: (i) whether the prior appellate order barred the Department from reopening the matter after an alleged change in the manufacturing process; and (ii) whether the use of steam for heating and power for pumping soap-stock disentitled the assessee to exemption under Notification No. 28/64-C.E.

Issue (i): whether the prior appellate order barred the Department from reopening the matter after an alleged change in the manufacturing process

Analysis: The earlier appellate order was treated as non-speaking and not controlling in the changed factual setting. The manufacturing process had materially altered from 1981, and the Department was entitled to re-examine the exemption claim in light of the new process. The demand was also confined to the permissible period under the limitation provision.

Conclusion: The reopening of the matter was upheld and the limitation-based restriction on demand was sustained against the assessee.

Issue (ii): whether the use of steam for heating and power for pumping soap-stock disentitled the assessee to exemption under Notification No. 28/64-C.E.

Analysis: The manufacture of soap was held to be an integrated process in which soap-stock was heated with steam and transferred with the aid of power before completion of the final product. The authorities' reliance on decisions concerning mere transport or post-manufacturing processes was distinguished because, on the facts, the impugned operations formed part of manufacture itself.

Conclusion: The exemption was held to be unavailable and duty was payable.

Final Conclusion: The assessee failed on both the jurisdictional and merits-based challenges, and the excise demand was sustained within the restricted period.

Ratio Decidendi: Where steam or power is used as part of an integrated manufacturing process that contributes to conversion of an intermediate product into the final excisable product, the exemption restricted to manufacture carried on without the aid of power or steam is not available.

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