Excise Duty is Applicable Or Not

[MAYUR DODIYA]

Dear Expert,

 I want to know that Excise Duty is applicable or Not on the following procedure:-

Mr X. is producing the following finished Goods:-

       NAME                                          GRADE

1. Sodium Chloride I.P. (salt) - above 99.5 percent   [ Chapter Heading no.- 25]

2. Potassium Chloride I.P.     - above 99.5 percent    [ Chapter Heading no.- 31]

3. Ammonium Chloride I.P.   - above 99.5 percent

And the following Raw Materials is used:-

          NAME                                       GRADE

1. Sodium Chloride I.P. (salt) - 98.5 to 99 percent

2. Potassium Chloride I.P.     - 98 to 99 percent

3. Ammonium Chloride I.P.   -  99 percent

Now Mr.X only Purifies the above Raw materials and produce the finished goods. And this above Salt is Purified by Washing Centrifuge & Drying. During purification of Raw Materials there is no change in Chemical Composition or Structure of the materials in the process.

[Viswanathan Nemmara]

For the purpose of making any product excisable to Central Excise duty, it is the upper most requirement that a new product having a different name, character or use is obtained as a result of the process of manufacture. Mere removing of impurities, does not bring into existence a new product and, therefore, processes undertaken by Mr.X, do not amount to manufacture. This was the view expressed by the Tribunal in the case of S.D. Fine Chem Pvt. Ltd  = (1995 (9) TMI 197 - CEGAT, NEW DELHI)  [1997 (91) E.L.T. 610 (T)] wherein it has been held that purification of bought out chemicals through distillation or re-crystallisation does not amount to manufacture.

This view has been followed by CESTAT (NZB) in Dabur India Ltd  (2004 (7) TMI 487 - CESTAT, NEW DELHI) =[2004 (174) E.L.T. 261 (Tri. - Del.)] also.

AI Summary

Excise duty on purification processes not leviable when mere removal of impurities leaves product unchanged in character or use. Excise duty is not leviable where purification processes (washing, centrifuging, drying) merely remove impurities without altering chemical composition, name, character, or use; such operations do not amount to manufacture. Tribunal authority treating distillation or recrystallisation of bought chemicals as non-manufacture supports that no excisable product arises from mere purification.