1984 (3) TMI 394 - AT - Central Excise

Summary

Issues:
1. Determination of whether grinding soap stone into powder amounts to a manufacturing process for excise duty purposes.
2. Interpretation of exemption notifications for excise duty under various Tariff Items.
3. Assessment of eligibility for exemption under Notification No. 176/77-CE based on total turnover.
4. Imposition of penalty for violation of excise rules regarding obtaining excise license and payment of duty.

Analysis:
The judgment involves a revision petition filed against an order-in-appeal regarding excise duty evasion by grinding soap stone into powder. The main issue is whether this process constitutes manufacturing for excise duty purposes. The Tribunal applied legal principles from previous cases to determine that converting soap stone into powder of specific mesh qualifies as manufacturing under the Central Excises and Salt Act, 1944. The Tribunal rejected the argument that the product falls under an exemption notification or a different Tariff Item, holding it liable for duty under Tariff Item 68.

Regarding the interpretation of exemption notifications, the Tribunal found that the soap stone powder did not qualify for exemption under Notification Nos. 23/55-CE, 114/73-CE, and 195/75-CE as it was not classified under a different Tariff Item. The appellants' claim of exemption under Notification No. 176/77-CE based on turnover was also dismissed as the total turnover exceeded the specified limit, and only job charges could not be considered for eligibility.

The Tribunal upheld the penalty imposed for not obtaining an excise license for one unit, emphasizing the violation of excise rules. The penalty of Rs. 500 under Rule 173Q of the Central Excise Rules was deemed appropriate. A dissenting opinion was provided, suggesting that grinding soap stone into powder may not create a new excisable product unless it acquires distinct characteristics. However, the majority view prevailed, leading to the dismissal of the appeal based on the manufacturing process and excise duty liability.