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2005 (6) TMI 92 - AT - Central ExciseClassification under CSH 2618.00 - demands - Process of manufacture - whether on carrying on the process of grinding, the Granulated Blast Furnace Slag (GBS) would bring into existence a new product viz. Ground Granulated Blast Furnace Slag (GGBS) - HELD THAT - We find that the activity of mere grinding of GBS to bring into existence GGBS would not amount to a process of manufacture. There is no chemical change nor does it change the character of the slag. The slag remains slag and, therefore, the finding given by the Commissioner, without examining the ratio of 23 judgments cited by the assessee, is not justified and not correct in law. Mere physical change will not bring into existence a different commodity. The change should bring a change in the name and character and use of the commodity as held by the Apex Court in a large number of judgments. In the case of Iswar Grinding Mills v. CCE 1999 (8) TMI 387 - CEGAT, CALCUTTA wherein crushing/powdering of tobacco leaves first manually and then with power aided crushing/grinding machine to form tobacco flakes/powder has been held to be not a process of manufacture. Likewise, the judgment of Alchemie Pvt. Ltd. v. CCE 1999 (8) TMI 380 - CEGAT, MUMBAI wherein it has been held that Concentrate spent liquor/wash containing 4 to 6% caustic soda obtained by concentration of 16-18% after removing impurities has been held to be not a new product and the process has been held to be not a process of manufacture. In the present case, there is no change in the character nor in its use and hence the ratio of the judgments cited by the Sr. Counsel would apply to the facts of the case. The impugned order is not correct and legal and hence the same is set aside by allowing the appeal with consequential relief, if any.
Issues:
Classification of Ground Granulated Blast Furnace Slag (GGBS) under CSH 2618.00 and confirmation of demands for the period 23-7-1996 to 2/2000. Analysis: The appeal involved the question of whether the process of grinding Granulated Blast Furnace Slag (GBS) to produce GGBS constitutes the creation of a new product and if it should be classified under a different heading. The appellant argued, supported by numerous legal precedents, that a mere physical change does not amount to the emergence of a new product. They cited cases like CCE v. Coimbatore Pioneer Fertilisers Ltd. and Sandoz (I) Ltd. v. UOI to support their position. On the other hand, the respondent contended that crushing stones into smaller sizes amounts to manufacture, referencing the decision in Hindustan Construction Co. Ltd. v. CCE, Chandigarh. However, the appellant highlighted the reversal of this ratio by the Apex Court in State of Maharashtra v. Mahalaxmi Stores, where it was held that crushing boulders into smaller size Gitti does not constitute a manufacturing process. Upon careful examination of the cited judgments, the tribunal concluded that the grinding of GBS into GGBS does not amount to a manufacturing process. They emphasized that there is no chemical change or alteration in the character of the slag during this process, and hence, the slag remains the same. The tribunal noted that for a change to be considered significant, it should impact the name, character, and use of the commodity. They referenced cases like Iswar Grinding Mills v. CCE and Alchemie Pvt. Ltd. v. CCE to support their decision, where similar transformations were not deemed as manufacturing processes. As there was no change in the character or use of the product in this case, the tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with any consequential relief. In conclusion, the tribunal's decision was based on the principle that a mere physical change, without altering the essential characteristics of the product, does not result in the creation of a new commodity. The judgment highlighted the importance of considering the impact on the name, character, and use of the product to determine if a manufacturing process has occurred.
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