1985 (4) TMI 297 - AT - Central Excise

Summary

Issues:
1. Whether the slurry resulted from the treatment of hydrochloric acid with lime constitutes dutiable goods?
2. Whether the neutralized slurry is considered a new commodity subject to excisability?
3. Whether the neutralization process amounts to manufacturing a new commodity?
4. Whether the exemption under Notification No. 179/77 applies to the neutralized slurry?
5. Whether the dispatch of slurry through pipelines constitutes the use of power in the manufacturing process?

Analysis:
1. The Collector of Central Excise found that the neutralized hydrochloric acid in the form of slurry constituted goods on which duty should have been paid when supplied to a customer. The factory claimed that the slurry waste was not sold but was a result of neutralization to destroy the dangerous hydrochloric acid. The Collector's order acknowledged that the central excise officers were aware and permitted the neutralization process.

2. The Department argued that the removal of waste material by a third party indicated that it was a goods with uses, citing the DCM case judgment. However, the factory contended that the waste was not marketable as it was a result of neutralization for destruction, not production. The factory emphasized that the slurry was not a new commodity but a waste product.

3. The tribunal concluded that the neutralization process was not for producing a new commodity but for destroying the hydrochloric acid. It was established that the central excise authorities were aware of and permitted the neutralization process, which was not considered a production of goods but a destruction, in line with Rule 49.

4. The Additional Collector denied the exemption under Notification No. 179/77, stating that power was used in dispatching the slurry through pipelines. However, the tribunal ruled that the dispatch of slurry through pipelines did not amount to the manufacture of the slurry by means of power and directed the exemption to be extended.

5. The tribunal unanimously held that the neutralization of hydrochloric acid resulting in slurry did not constitute manufacturing and, therefore, the slurry was not subject to duty. The judgment emphasized that the slurry was a waste product and not a dutiable goods.

Conclusion:
The tribunal ruled that the neutralized slurry resulting from the destruction of hydrochloric acid was not considered a new commodity subject to excisability. The exemption under Notification No. 179/77 was directed to be extended, and it was clarified that the dispatch of slurry through pipelines did not constitute the use of power in the manufacturing process. The judgment emphasized that the slurry was a waste product and not a dutiable goods, thus not attracting duty.