1984 (8) TMI 207 - AT - Central Excise

Manufacture - Asbestos fluff obtained from asbestos rock by crushing, pulverising and sieving

Summary

Issues Involved:
1. Validity of adjudication proceedings without a show cause notice.
2. Whether the process carried out by the respondent amounts to "manufacture".
3. Classification of the product under Central Excise Tariff Item No. 22F.
4. Whether the demand for the period 24-5-1977 to 5-8-1977 is time-barred.

Detailed Analysis:

1. Validity of Adjudication Proceedings Without a Show Cause Notice:
The respondent raised a preliminary objection regarding the validity of the adjudication proceedings, arguing that no show cause notice was issued before the demand was made. The appellant countered that the letter dated 20-3-1978 from the Superintendent of Central Excise provided all necessary details usually included in a show cause notice. The tribunal accepted the appellant's contention, noting that the letter and subsequent demand form D.D. 2 disclosed all requisite details. Furthermore, the Assistant Collector had granted the respondent an opportunity to defend the case and cross-examine the Chemical Examiner. Thus, the tribunal overruled the preliminary objection and deemed the adjudication proceedings valid.

2. Whether the Process Carried Out by the Respondent Amounts to "Manufacture":
The respondent contended that their process of crushing and grinding asbestos rock into powder/fluff did not constitute "manufacture". The tribunal referred to the Delhi High Court's judgment in Hyderabad Asbestos Cement Products Limited v. Union of India, which held that such processes amounted to manufacture. The tribunal found that the respondent's process resulted in a commercially distinct product from the original mined asbestos rock, thereby constituting "manufacture". Hence, the tribunal rejected the respondent's contention.

3. Classification of the Product Under Central Excise Tariff Item No. 22F:
The primary dispute was whether the asbestos fluff produced by the respondent fell under Central Excise Tariff Item No. 22F. The appellant argued that asbestos, in all its forms (including fluff), is essentially fibrous and thus falls under Item No. 22F. The respondent countered that the amphibole variety of asbestos they used was not fibrous and thus should not be classified under Item No. 22F. The tribunal considered various scientific definitions and expert testimonies, concluding that asbestos is inherently fibrous, regardless of the length of its fibres. Consequently, the tribunal agreed with the appellant that asbestos fluff should be classified under Item No. 22F.

4. Whether the Demand for the Period 24-5-1977 to 5-8-1977 is Time-Barred:
The respondent argued that the demand for the period 24-5-1977 to 5-8-1977 was time-barred as of the date of the demand (24-5-1978). The tribunal referred to its earlier decision in the Atma Steel Case, which held that the relevant period of limitation is the one in force at the time of the show cause notice. Based on this precedent, the tribunal agreed with the respondent that the demand for the specified period was indeed time-barred.

Conclusion:
The tribunal set aside the order of the Collector (Appeals) and restored the order of the Assistant Collector dated 2-3-1982, except for the demand for the period 24-5-1977 to 5-8-1977, which was found to be time-barred. The appeal was allowed on these terms, and the respondent's cross-objection was dismissed.