2003 (3) TMI 141 - SC - Central Excise

Summary

Issues involved:
Interpretation of manufacturing process for duty levy on Tartaric Acid, consideration of recovery vs. manufacture, examination of job work vs. sale transactions, assessment of duty payment on sales by 1st respondent, evaluation of extended period of limitation for duty collection.

Analysis:

1. Manufacturing Process Interpretation:
The case involved a dispute regarding the manufacturing process of Tartaric Acid by the 1st respondent. The Commissioner initially held that there was no manufacture but only recovery of Tartaric Acid. The appellant claimed that Tartaric Acid was a new and distinct product from L-2 ABT, seeking to levy duty on its manufacture. The Tribunal dismissed the appeal solely on the ground that there was no manufacture, emphasizing the process as involving only recovery of Tartaric Acid.

2. Recovery vs. Manufacture:
Affidavits on record indicated that L-2 ABT, a by-product in the manufacturing process of Ethambuton Hydrochloride I.P., was essentially contaminated Tartaric Acid, unusable without a recovery process. The court highlighted that if Tartaric Acid was merely being recovered for further use, there would be no manufacture. However, if a person without imported Tartaric Acid obtained it from L-2 ABT through a process for sale, it would constitute manufacture and attract duty payment.

3. Duty Payment on Sales by 1st Respondent:
The Attorney General pointed out that the 1st respondent was not only recovering Tartaric Acid for the other manufacturers but also selling it independently. This raised the question of duty payment on such sales, as the 1st respondent had cleared the goods without paying any duty. The court directed the Tribunal to examine these aspects that were overlooked previously.

4. Job Work vs. Sale Transactions:
Another crucial aspect was determining whether the 1st respondent was merely performing job work on behalf of other manufacturers or engaging in sale transactions. If the 1st respondent was only doing job work and recovering Tartaric Acid for the other manufacturers, there would be no manufacture. However, if there were actual sale transactions involved, duty would be payable on those transactions. The Tribunal was instructed to thoroughly investigate these aspects.

5. Extended Period of Limitation:
Lastly, the court instructed the Tribunal to consider whether the extended period of limitation under Section 11A would be applicable in this case for duty collection. The matter was remitted back to the Tribunal with directions to allow all parties to present their legal contentions and thoroughly examine the various aspects discussed in the judgment.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the court's directions for further consideration by the Tribunal.