1986 (6) TMI 44 - HC - Central Excise

Summary

Issues:
1. Whether bagasse is considered a manufactured product under the Central Excises and Salt Act, 1944.
2. Whether bagasse can be classified as an intermediate good or component part of any goods for exemption purposes.

Analysis:

Issue 1:
The petitioner argued that bagasse, a by-product of sugar manufacturing, is not a manufactured product under the Central Excises and Salt Act, 1944. The petitioner contended that bagasse is not marketed commercially and does not undergo a manufacturing process as defined in the Act. However, the court disagreed, emphasizing that the definition of "manufacture" in the Act includes any process incidental to the completion of a manufactured product. The court noted that bagasse, despite being a by-product, is commercially used as fuel and in the manufacture of paper, establishing its status as a commercial product. Citing the Supreme Court's ruling in Empire Industries Ltd. v. Union of India, the court held that any transformation of an object through labor and skill, leading to commercial differentiation, constitutes manufacturing under Central Excise laws. Consequently, the court rejected the petitioner's argument that bagasse is not a manufactured product.

Issue 2:
The petitioner also claimed exemption for bagasse under specific notifications, arguing that it should be considered an intermediate good or component part of any goods. However, the court ruled against this contention as well. It clarified that bagasse, being a by-product of sugar production, does not qualify as an intermediate good or component part of sugar. The court highlighted that an intermediate good or component part is something that contributes to the final product's manufacturing process, which bagasse does not do in the case of sugar production. Therefore, the court dismissed the petitioner's claim for exemption based on bagasse being an intermediate good or component part of any goods.

In conclusion, the court dismissed the writ petition, upholding the demand for duty on bagasse used by the petitioner. The court found that bagasse qualifies as a manufactured product under the Central Excises and Salt Act, 1944, and does not meet the criteria to be considered an intermediate good or component part for exemption purposes.