TaxTMI 
TaxTMI 
1998 (5) TMI 74
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....anding duty of Rs. 17,53,307.11 in respect of LDPE moulding powder obtained by pulverizing LDPE granules and imposing a penalty of Rs. 8 Lakhs. 2. Shri Kamal Trivedi, learned Counsel for the appellants submits that the following three main issues arise for consideraion : (I) Whether the activity of pulverizing LDPE/HDPE granules to obtain smaller size particles/fine moulding powder amounts to manufacture in terms of Note 6 to Chapter 39 of the Central Excise Tariff Act, 1985 read with Section 2 (f)(ii) of the Act? (II) Whether the extended period of limitation is available to the department? (III) In the event of Issue No. I being decided against the appellants, whether they are entitled to Modvat credit agai....
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....nder T.I. 15A(i) of the Schedule to the erstwhile Cental Excise Tariff before the powder is used for the purpose of manufacture of plastic water tanks falling under T.I. 68. On 24-2-1986, the Range Superintendent directed the appellants to follow the licence procedure with effect from 2-4-1986, on the ground that process of conversion of granules into small size particles is nothing but change of product from one primary form to another, amounting to manufacture. On 5-3-1986, the appellants replied explaining as to how the process of pulverizing is not a process of chemical synthesis and since it is only change in primary form as a result of chemical synthesis which is considered as manufacture in terms of Chapter Note 6 to Chapter 39....
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....ant was receiving LDPE granules and converting them into small size particles. Thereafter, by letter dated 29-5-1986, the Divisional AC informed the Collector of Central Excise, Baroda that the unit of the appelllant company was engaged in the activity of pulverizing LDPE granules into moulding powder and that a case had been booked against the appellants by the Preventive staff which resulted in the issue of a show cause notice dated 22-7-1985 which was ultimately dropped by the Collector vide order dated 1-4-1986. From the above exchange of correspondence, it is clear that the department was all along aware of the activity of pulverization undertaken by the department and there is no question of any fraud or wilful suppression of facts....
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....e of show cause notice i.e. 28-2-1986 to 8-12-1987 is barred by limitation and duty payable only for the period from 8-12-1987 to 2-2-1988 being the period within the normal period of limitation. III. As regards the plea of grant of Modvat credit, the matter is remitted to the Commissioner of Central Excise, Baroda for determining this issue in the light of the legal position as reflected in the orders of the Tribunal including the Larger Bench decision in the case of Dai-Ichi Karkaria reported in 1996 (81) E.L.T. 676. The Commissioner of Central Excise shall hear the appellants and pass appropriate orders in accordance with law. The appeal is disposed of in the above terms. 4. [Order per : S.K. Bhatnagar, Vice President]....
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....t's judgments as to whether as a result of such deemed manufacture, a new commodity known to the market emerges in order to treat the product as an excisable item. This aspect, however, does not seem to have attracted the attention in the aforesaid cases and has not been urged in the present case as well. On the contrary, The appellants have not pressed this point relating to excisability. Therefore, I do not propose to go further on this point but, I am still recording the above position as we are bound by Hon'ble Supreme Court's judgments and there are already a catena of orders on this aspect that emergence of a new marketable commodity was essential to hold a product excisable. 6. Insofar as the question of time bar is concerned....