Recovered solvents are not excisable goods when mere purification does not create a new product with distinct character and use.

Spent methanol and other recovered solvents cleared from the factory were treated as non-excisable, because they had already been used in bulk drug manufacture and were later only recovered, purified, and sold as spent material. Applying the settled test of manufacture, the Tribunal found that recovery or purification of an already used substance does not create a new product unless a distinct commodity with a different name, character, and use emerges. On that basis, the recovered solvents were not regarded as excisable by-products and no central excise duty was payable on their clearance.

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Issues: Whether spent methanol and other recovered solvents cleared from the factory were excisable goods liable to central excise duty.

Analysis: The Tribunal held that the issue was covered by its earlier decisions on recovered or spent solvents. It accepted that the solvents had already been used in the manufacture of bulk drugs, were subsequently recovered and purified for reuse, and that the excess material sold was only spent solvent which had lost its value. Applying the settled test, the Tribunal found that mere recovery or purification of an already used material does not amount to manufacture unless a new and distinct product with a different name, character and use emerges. On that basis, the Tribunal rejected the Revenue's contention that the spent solvents were excisable by-products.

Conclusion: Spent methanol and similar recovered solvents were held not to be excisable goods, and no duty was payable on their clearance.

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