LexCOLLECTOR' CENTRAL EXCISE, BOMBAY versus M/S. S.D. FINE CHEMICALS PVT. LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A
COLLECTOR' CENTRAL EXCISE, BOMBAY
v.
MIS. S.D. FINE CHEMICALS PVT. LTD.
MARCH 30, 1995
B
(B.P. JEEVAN REDDY AND SUHAS C. SEN, JJ.)
Central Excises and Salt Act, 1944:
Section 2(f}-'Manufacture'-Meaning and scope of expression-Held
C definition is expansive.
Assessee manufacturing Chemicals and fine chemica/s-{fnde1taking
process of distillation and recrystallisatiort-Exemption from duty on the
ground that process undenaken was not manufactt1~ejectivn of claim-
Appeal-Tribunaf-DiJference of opinion between two Membe~eference
D to third Member-Disposal of issue by third-Member in a cryptic man-
nei--On Revenue's appeal matter remitted to third Member for fresh opinion.
'
The respondent was manufacturing laboratory chemicals and fine
chemicals by employing the process of distillation and recrystallisation. It
claimed exemption from excise duty, under Notification No. 77 of 1983
E dated March 1, 1983, on the ground that the process under-taken by it does
not amount to manufacture. The Assistant Collector allowed the exemp-
tion but on appeal the Collector held that the respondent was liable to pay
duty because the process undertaken by it amounted to manufacture
inasmuch as a new commodity emerges out of the adopted process. On
F
further appeal there was a difference of opinion between two Members of
the Customs, Excise and Gold Control Appellate Tribunal. Member (Tech-
nical) held that the process undertaken by the respondent was merely for
improving the quality of purity of the chemicals and does not amount to
manufacture; even after purification, the chemicals are known by the very
same name and that there was no change in the che'!lical formula even
G after purification. On the other hand Member (Judicial) took a contrary
view and held that the process undertaken by the respondent was not a
simple process and that the said process brings in a transformation which
will change the name, character and use making the goods excisable. In
view of this difference of opinion tlie matter was referred to a third
H Member who held in favour of the respondent-manufacturer. However he
84
C.C.E. v. FINE CHEMICALS
85
did not deal with the several aspects dealt with in the opinions of the two A
differing members. He did not also indicate whether he agreed or dis-
agreed with the findings recorded by the Member (Judicial).
Against the decision of the Tribunal, Revenue preferred an appeal
to this Court.
Remitting the matter for fresh opinion of the third Member of the
Tribunal, this Court
HELD: 1. The definition of the expression 'manufacture' under
Section 2(1) of the Act is not confined to the natural meaning of the
expression 'manufacture' but is an expansive definition. Certain processes,
which may not have otherwise amounted to manufacture, are also brought
within the purview of and placed within the ambit of the said definition by
the Parliament. Not only processes which are incidental and ancillary to
B
c
the completion of manufactured product but also those processes as are
specified in relation to any goods in the section or chapter notes of the D
schedule to the Central Excise Tariff Act, 1985 are also brought within the
ambit of the definition. Though the principles enunciated are clear, it is
. their application that present difficulties and it does not help to draw "any
sharp or intrinsic distinction between. 'processing' and 'manufac:ture',
"which would only result in an oversimplification of both and tends to blur E
their interdependence in cases such as the present one". It would also be
not right to try to restrict the sweep of the definition with reference to
Entry 84 List I of the seventh Schedule to the Constitution. Since the
constitutionality of the said definition has been repeatedly upheld with
reference to both Entries 84 and 97 of List I, the definition must be
understood in terms it is couched. It should also be remembered that the F
question whether a particnlar process does or does not amount to
'manufacture' as defined under section 2(1) is always a question offact to
be determined in the facts of a given case. One of the main tests evolved
is whether on acconnt of the processes employed or applied by the assessee,
the commodity so obtained is no longer regarded as the original com- G
modity but is, instead, recognised a a distinct and new article that bas
emerged as a result of the processes. [93-F to H, 94-A to Cf
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