1999 (8) TMI 594 - AT - Central Excise

Recovery process not manufacturing: Duty liability does not apply. Tribunal clarifies criteria for duty under Central Excise Law.

COMMR. OF C. EX., MUMBAI-II Versus YASH PHARMA CHEM (BOMBAY) PVT. LTD.

The Tribunal held that the recovered tartaric acid was not a new product but a result of a recovery process, not manufacturing. As no new product emerged ... Manufacture Issues:Determination of duty liability on recovered tartaric acid, whether a new product emerged, limitation of demand, applicability of specific notifications, marketability of product, process of recovery vs. manufacture.Analysis:The case involved appeals by the Revenue regarding the duty liability on tartaric acid recovered by a third party from two drug manufacturers. The Revenue argued that the recovered tartaric acid was a new product, thus attracting duty liability. On the other hand, the respondents contended that it was merely a recovery process with no new product emerging. The Adjudicating Authority found that no new product had been created, and the recovered tartaric acid remained the same commercially. The Authority cited the judgment in Alladi Venkateshwarulu v. Government of Andhra Pradesh to support this finding.The Revenue further argued that the recovered tartaric acid was a distinct product subject to duty, not covered by specific notifications exempting certain products. The Revenue contended that the recovered tartaric acid was a new commodity, attracting duty liability. However, the respondents argued that the recovered tartaric acid was non-marketable and merely a recovery process. They presented expert affidavits supporting their position.The Tribunal considered the evidence and found that the process undertaken by the respondents was a recovery of tartaric acid, not manufacturing a new product. The Tribunal emphasized that the test for determining manufacture under Central Excise Law is whether a new product with different characteristics has emerged. As no new product had been created, the duty liability did not apply. The Tribunal dismissed the Revenue's appeals based on this ground, rejecting the arguments regarding the applicability of specific notifications and marketability of the product.In conclusion, the Tribunal held that the recovered tartaric acid was not a new product, and the process undertaken was a recovery, not manufacturing. The duty liability did not devolve on the respondents, and the appeals of the Revenue were dismissed. The Tribunal clarified that the judgment in Apar Private Ltd. regarding the purification process of transformer oil base stock did not apply to the present case. The decision focused on whether a new product had emerged, emphasizing the commercial identity of the product before and after the process.