2007 (8) TMI 279 - HC - Central Excise

Whether mixing of reddish pan masala with fresh pan masala will amount to remade, refined or recondition in the context of Rule 173-L of Central Excise Rules, 1944, and whether it will amount to manufacture under Chapter Note 7 of Chapter 21 of Central Excise Tariff Act, 1985 - Tribunal has rightly decided that it does not amount to manufacture - there is no reason to seek reference on the questions of law - applications are rejected

Summary

Issues:
1. Seeking a reference with respect to orders passed by the Customs, Excise & Gold (Control) Appellate Tribunal regarding the mixing of reddish pan masala with fresh pan masala.
2. Determining whether mixing of reddish pan masala with fresh pan masala amounts to manufacture under relevant legal provisions.
3. Considering the Tribunal's decision on whether the mixing process constitutes manufacturing and the implications on refund claims.

Analysis:
The High Court of Allahabad, comprising Chief Justice H.L. Gokhale and Justice R.K. Agrawal, heard the reference applications presented by the revenue seeking clarification on the Tribunal's orders regarding the mixing of reddish pan masala with fresh pan masala. The revenue contended that this mixing process should be considered as manufacturing, a stance rejected by the Tribunal. The core question for reference was whether this mixing activity falls under the definition of remade, refined, or reconditioned as per Rule 173-L of the Central Excise Rules, 1944, and whether it qualifies as manufacturing under Chapter Note 7 of Chapter 21 of the Central Excise Tariff Act, 1985.

The Tribunal, after determining that the mixing did not amount to manufacturing, directed the assessee to reverse the modvat credit before receiving the refund. In support of their position, the revenue cited a judgment from the Supreme Court in Indian Organic Chemicals Ltd. v. Collector of Customs & Excise, wherein it was established that if the physical and chemical characteristics of the original input waste and the resultant waste remain the same, the resultant waste cannot be deemed as manufactured. The High Court concurred with this reasoning and found no grounds to refer the questions of law raised by the revenue for determination. Consequently, all three reference applications were dismissed by the Court.

This judgment highlights the importance of interpreting legal provisions accurately in the context of manufacturing activities and the treatment of mixed products under relevant excise rules. The decision underscores the need for consistency in determining what constitutes manufacturing to ensure fair treatment of taxpayers and adherence to established legal principles.