1986 (12) TMI 175 - AT - Central Excise

Summary

Issues:
1. Whether the grinding of soap stone lumps into powder constitutes manufacture attracting Central Excise duty.
2. Whether the product manufactured falls under the exemption from duty as per notification No. 23/55-C.E.

Analysis:
1. The case involved a dispute regarding the classification of grinding soap stone lumps into powder as manufacturing under Section 2(f) of the Central Excises & Salt Act. The Assistant Collector initially upheld the duty demand, but the Appellate Collector ruled that grinding soap stone did not amount to manufacture. The Collector of Central Excise appealed this decision, arguing that the grinding process constituted manufacture as per Section 2(f) of the Act.

2. The Tribunal considered previous decisions and the nature of the activity. The Tribunal observed that the grinding process aimed to produce different grades and qualities of powder for specific industrial applications, indicating a manufacturing process. The Tribunal referenced a previous order where grinding soap stone into powder was considered a manufacturing process. The Tribunal concluded that grinding soap stone lumps into powder constituted manufacture under the Act, disagreeing with the Appellate Collector's ruling.

3. The respondents argued for exemption under notification No. 23/55-C.E., claiming their product fell under item 1 of the notification, which listed minerals like talc as exempt from excise duty. The Department contended that the product must be proven to be used as an extender, suspending agent, filler, or diluent to qualify for exemption. The Tribunal referred to a decision in Collector of Central Excise v. Madhu Chemicals, where it was clarified that the substance need not be classified under a specific item but should be known to be employed as an extender, filler, etc., to qualify for exemption.

4. The Tribunal agreed with the interpretation in the Madhu Chemicals case, holding that the respondents were entitled to the benefit of exemption under notification No. 23/55-C.E. for their product. The Tribunal dismissed the appeal, affirming the respondents' entitlement to the exemption from duty as per the notification.

This detailed analysis highlights the key legal arguments, interpretations of relevant provisions, and the Tribunal's decision on the issues raised in the case.