2004 (1) TMI 202 - AT - Central Excise

Summary

Issues: Classification of rosin and turpentine oil for duty rate determination based on the use of power in the manufacturing process.

Analysis:
1. The appeal challenged the classification of rosin and turpentine oil by the Commissioner (Appeals) who upheld the decision of the Deputy Commissioner regarding the use of power in the manufacturing process, denying the nil rate of duty.
2. The appellants claimed nil rate of duty as the goods were manufactured without the aid of power, but the Deputy Commissioner disagreed without allowing the appellants to present their case.
3. The Commissioner (Appeals) reviewed the manufacturing process involving manually operated equipment, coal-fired bhatti, and power-operated pumps for water, concluding that power was indeed used in the manufacturing process.
4. The Commissioner (Appeals) emphasized the integral connection of power use in processes like segregation and cleaning, rejecting the appellants' argument that gravity-fed water on the condenser did not constitute power use.
5. The appellants cited a Tribunal decision stating that power use in raw materials not directly involved in the final product's manufacture does not count as power use in the final product's manufacturing process.
6. The appellants referenced a departmental clarification indicating that power use limited to drawing water for cooling purposes does not constitute power use in the manufacturing process, which they argued was binding on the department.
7. The departmental representative relied on a Supreme Court decision to argue that power use in handling operations affects the raw material and constitutes power use in manufacturing, contrasting the appellants' reliance on departmental circulars as binding.
8. After hearing both sides, the Tribunal considered the departmental clarification binding if beneficial to the assessee, ultimately accepting the appellants' contention that no power was used in the manufacturing process, thus granting them the exemption.
9. The Tribunal set aside the Commissioner (Appeals) order, ruling in favor of the appellants based on the absence of power use in the manufacturing process of rosin and turpentine oil, entitling them to the exemption.