1985 (4) TMI 307 - AT - Central Excise

Summary

Issues involved: Assessment of duty on spent earth in soap manufacture, suppression of information, time-barred demand, classification under central excise tariff, definition of manufacture.

Assessment of duty on spent earth: The Appellate Collector determined that spent earth from soap manufacture is assessable to duty under item 68 of the central excise tariff due to its distinct name, uses, and saleability to manufacturers of cheap washing soap. The spent earth is a by-product obtained when activated bleaching earth loses its activity after decolouring oil during the soap manufacturing process.

Suppression of information and time-barred demand: The Assistant Collector found that the factory suppressed information about spent earth while applying for a license and did not include it in their bond, leading to a time limit for demand of 5 years. The factory argued that spent earth was not intentionally manufactured but generated as waste during the soap production process.

Classification under central excise tariff and definition of manufacture: The central excise argued that spent earth had a distinct use and should be declared to the central excise, citing tariff advice classifying it under item 68. The factory contended that spent earth was not a manufactured product but a waste material, referencing legal precedents on what constitutes manufacture and end-products. The Tribunal concluded that spent earth, being a baser material than the activated earth, did not undergo a manufacturing process and should not be subject to duty twice.

Conclusion: The Tribunal held that the duty demanded by central excise on spent earth was not justified as it had already been paid on the activated earth, and selling spent earth for use in soap manufacture did not make it liable for excise duty. The Collector of Central Excise was directed to act in accordance with the Tribunal's orders.