TaxTMI 
TaxTMI 
2004 (1) TMI 423
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....stinct products having "different properties viz., composite for direct use and hence, confirmed demand of Rs. 55,82,203/- confirmed in order dated 24-4-1996 for the period 3-5-1995 to 31-8-1995, Rs. 56,72,110/- confirmed in order dated 24-4-96 for the period 1-9-1995 to 31-12-1995, Rs. 56,76,695/- for the period January, 96 to May, 1996 and Rs. 45,56,839/- for the months of June, 96 to July, 96 confirmed in order dated 18-3-1997, (Total duty demands equal Rs. 2,14,87,847/-) against which the assessees have preferred three appeals bearing Nos. E/156/98, E/157/97 and E/158/98. Appeal No. E/495/2001 has been filed by the Revenue against the order of the Commissioner (Appeals), who has accepted the assessee's contention that the process above mentioned does not amount to manufacture in the light of the ratio of the Tribunal's decision in CCE v. Markfed Agro Chemicals [1993 (68) E.L.T. 848], rejecting the appeal of the Revenue against the approval of classification list No. 14, dated 6-3-95 of the assessee, by the Assistant Commissioner, Panvel. 3. We have heard both sides. We find that the issue came up for consideration by the Tribunal in the case of CCE v. Markfed Agro Chemi....
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....was made to the circular issued under Section 37B before Hon'ble Gujarat High Court, which by its order dated 15-4-1996 in Special Civil application Nos. 8580/95, 8730/95 and 9034 to 9036/95, [1996 (88) E.L.T. 35 (Guj.)] quashed the Circular and set it aside, holding that Section 37B of the Central Excise Act, does not authorise the Board to issue directions contrary to the decision of the Tribunal. The said circular was also struck down by the Delhi High Court in C.W.P. Nos. 3903/95, 3836/95, 3939/95 and 1008/96 in the case of Kissan Chemicals [1996 (88) E.L.T. 648 (Del.)]. 5. The Tribunal's decision in the case of Markfed Agro Chemicals, reported in 1993 (68) E.L.T. 848 (Tri.), therefore, holds the field and its required to be followed, particularly when the processes carried out by Markfed Agro Chemicals and the appellants before us are the same, and have not been distinguished. 6. Ld. DR seeks to distinguish the earlier order by drawing our attention to the finding of the Assistant Commissioner that the process carried out by the appellants herein also modified the surface active properties of the pesticides, but this finding in not based upon any material on re....
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....amendments were effected by the Finance Act, 1996 to incorporate statutorily the substance of the circular. 9. I find that the Markfed decision has been followed by the Tribunal in the following cases :- (i) Kilpest India Ltd. v. CCE - 1999 (110) E.L.T. 866. (ii) CCE, Guntur v. Winfield Chemical India - 2002 (140) E.L.T. 477. (iii) CCE, Coimbatore v. Kayes Agro Industries - 2001 (132) E.L.T. 701. However, in all these cases, the Department has gone in appeal to the Apex Court against the Tribunal decisions as seen from : - (i) 2000 (121) E.L.T. A73 (S.C.) (ii) 2002 (142) E.L.T. A170 (S.C.). (iii) 2002 (143) E.L.T. A264 (S.C.) These appeals have been admitted by the Apex Court on 13-10-1999, 14-1-2002 and 6-5-2002 respectively, but the outcome of the same in respect of cases at (i) and (ii) above is not known, whereas in the case at (iii) above, the civil appeal was dismissed after condoning the delay. 10. In view of th....
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....is one of the reasons for which he has not been able to apply to ratio of Markfed decision to the present case as recorded by him in the said order. As such, the fact situation in the present case is materially different from that of Markfed in this regard. 12. Even otherwise, I am unable to honestly agree with the ratio of the decision arrived at by the Tribunal in the case of Markfed (supra) for the following reasons :- (1) Markfed has relied on the ratio of Sandoz India Ltd. v. UOI and Others - 1980 (6) E.L.T. 696. In the case of Sandoz, firstly Foron liquid was obtained by conversion from the solid stage and secondly on the basis of material that was available in the case, the Court came to a conclusion that it was not possible to hold the process amounting to manufacture. In my view, the process considered in Sandoz was not similar to the one involved in manufacture of formulation grade pesticide as it is not a case of conversion from solid state to liquid state and therefore, the ratio of Sandoz is not applicable to the case at hand. (2) Markfed (supra) also referred to the ratio....
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....t be 'handled' for use directly as its effect, then would be adverse to what it is intended for. It is thus essential on the part of manufacturer, in this case the assessee to dilute the technical grade product to required level for direct use by any person. Unless the Technical grade pesticides and diluted to formulation grade pesticides, this cannot be made available for retail sale. If the assessee would have cleared only technical grade pesticides these would have to be necessarily sold to a consumer who would use it only for conversion to formulation grade pesticides. It is therefore very clear that the properties of technical grade pesticides vastly differ from formulation grade pesticides. The conversion process too cannot be simple as that made to look by the assessee in their submission. If it was so, the assessee would have/could have cleared/sold the technical grade pesticides having concentration 70% or more with necessary instructions along with the product for conversion to formulation grade at the user end. This however, is not the case. The person who can do the conversion has to be an expert in the subject. The use of the agents such as dust carriers, solvents, emu....
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....ent use is not only a sophisticated process but is also an irreversible process. (5) There are a number of Apex Court decisions, the ratio of which support the case of the Revenue that conversion of technical grade pesticides to formulation grade pesticides resulting in new and different marketable commodities with different and distinct use amounts to manufacture. Some of these are :- (i) Indian Cable Co. Ltd. v. CCE, Calcutta - 1994 (74) E.L.T. 22 (S.C.) : A finding that goods are marketable is a pre-requisite for levy of duty. Marketable only means "saleable" or "suitable for sale". (ii) UOI v. J.G. Glass Industries Ltd. - 1998 (97) E.L.T. 5 (S.C.) : Whether the process is that of "Manufacture" is based on two-fold test - First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist - Secondly, whether the commodity which has already been in existence will serve no purpose or will be of no commercial use but for the said process (iii) South Bihar Sugar....
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....ed by the ld. Member (J) and ld. Member (T) have been perused and the material on record and submissions made considered. It is found that : - (a) The facts of the case of dilution of technical grade pesticides into various lesser dilution and marketing them with brand name and the issues involved herein have been brought out in the order prepared by the ld. Member (J) and the same are not being repeated. (b) The issue of whether manufacture "as understood under the Central Excise Act, 1944 takes place is to be determined by the two-fold test as held in UOI v. J.G. Glass Industries Ltd., 1998 (97) E.L.T. 5 (S.C.), which are; (i) Whether by the said process a different commercial commodity comes into existence. (ii) Whether the identity of the original commodity ceases to exist in the case of laminated packaging, the Apex Court had held in Para 6 of the said decision as under : - "6...."The further contention urged on behalf of the appellant that the goods belong to the same entry is also not relevant because even if the goods....