1983 (4) TMI 284 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Rock Phosphate as a Fertilizer under Tariff Item 14HH.
2. Whether the process of crushing rock phosphate amounts to "manufacture".
3. Applicability of Rule 9(2) and Rule 10 of the Central Excise Rules regarding time-bar.

Summary:

1. Classification of Rock Phosphate as a Fertilizer under Tariff Item 14HH:
The appellant, engaged in mining and marketing phosphorite, contended that their product, Mussoorie Phos (rock phosphate), should not be classified as a fertilizer under Tariff Item 14HH. They argued that the product was a natural mineral fertilizer and not chemically treated. The Tribunal upheld the classification under Item 14HH, stating that Mussoorie Phos is a mineral product treated as a phosphatic fertilizer. The exclusion clause in Item 14HH was interpreted to apply only to "natural animal fertilizers" and not to mineral fertilizers like rock phosphate.

2. Whether the Process of Crushing Rock Phosphate Amounts to "Manufacture":
The appellant argued that mere crushing and sieving of rock phosphate did not constitute "manufacture" as it did not involve any chemical change. The Tribunal, referencing a Division Bench authority of the Delhi High Court, held that the detailed process of breaking, powdering, and sieving rock phosphate did amount to manufacture. This process transformed the raw material into a different article with a distinct name, character, and use, making it liable for excise duty.

3. Applicability of Rule 9(2) and Rule 10 of the Central Excise Rules Regarding Time-Bar:
The appellant contended that the demand for excise duty was time-barred under Rule 10, which allowed a six-month period for raising demands. The Assistant Collector and Appellate Collector initially invoked Rule 10A, allowing a longer period. The Tribunal found that Rule 10A was wrongly invoked as it was repealed before the demand notice was issued. The majority view held that the demand could only be enforced for six months preceding the date of the notice (14-9-1977). However, a dissenting opinion cited a Special Bench decision, suggesting that the one-year period under the old Rule 10 should apply for demands related to periods before the rule change.

Conclusion:
The Tribunal upheld the classification of Mussoorie Phos under Tariff Item 14HH and confirmed that the process of crushing rock phosphate constituted "manufacture." The majority view limited the enforceable period for excise duty to six months preceding the demand notice, while a dissenting opinion argued for a one-year period based on the old rules.