2002 (5) TMI 190

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....101.80 of the Schedule to the Central Excise Tariff Act. 2. Shri D.C. Mandal, learned Consultant submitted that the Appellants use Catchment Gauzes and Platinum/Rhodium Gauzes as catalyst in the manufacture of Nitric Acid; that during the process of manufacture, the impugned gauzes become ineffective after continuous use which are cleared by them for refining and refabrication; that the Adjudicating Authority has held, under the impugned order; that gauzes precious metals are converted into waste and scrap of precious metals having altogether different use and qualities and this is part of the process of .manufacture and the scrap of precious metals is classifiable under sub-heading 7101.80 of the Tariff. The learned Consultant, further,....

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.... of the catalyst." The learned SDR submitted that because of Chemical action, gauzes are converted into waste and scrap of precious metal having altogether different use and qualities; that thus process of manufacture has taken place and Central Excise duty is chargeable. The learned SDR also referred to Explanatory Notes of H.S.N. which mentions that Heading 71.12 "covers waste and scrap in metallic form fit only for the recovery of the precious metal, or for use as a basis for the manufacture of chemicals. The heading also covers waste and scrap of any material containing precious metal or precious metal compound, of a kind used principally for the recovery of precious metal... .It includes, in particular : (A)    &....

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.... of nitric acid and the gauzes after becoming ineffective on account of continuous use are sent for refining and re-fabrication. The Revenue's case is that the gauzes have been converted into scrap on account of chemical reaction and as per Explanatory Notes of HSN such worn out catalyst are scrap of precious metal classifiable under sub-heading 7101.80 of the Tariff. But for being excisable, the goods must be produced or manufactured under Section 3 of the Central Excise Act, In has been held by the Supreme Court in U.O.I. v. Delhi Cloth & General Mills, 1977 (1) E.L.T. (J199) that "Excise duty is on the manufacture of goods and not on the sale." The Court further held that to say that manufacture is complete as soon as, by the application....