1985 (7) TMI 264 - AT - Central Excise

Summary

Issues:
- Whether the process of crushing asbestos rocks into powder amounts to manufacture attracting Central Excise duty.
- Whether the crushing process results in the production of a new excisable commodity distinct from the parent product.

Analysis:
The case involved two appeals where the issue for decision in both was the same. The Assistant Collector confirmed demand for payment of duty and imposed a penalty on two respondents for manufacturing an excisable product falling under Item 22-F without the necessary license. However, the Appellate Collector set aside these orders, stating that the crushing of asbestos stone into powder did not amount to manufacture attracting Central Excise duty.

The appellant Collector argued that by crushing asbestos rocks/lumps to powder, the asbestos fiber in the rocks is separated, resulting in the production of asbestos fiber, which is classifiable under Item 22-F CET. The appellant contended that this process amounts to manufacture under Section 2(f) of the Central Excises and Salt Act.

The respondent relied on previous decisions to argue that mere crushing of rocks to powder would not amount to manufacture unless an excisable product distinct from the rock comes into existence. The respondent claimed that in this case, fibers were not separated due to the nature of the rocks crushed. However, the Tribunal found evidence in scientific sources that asbestos fibers are obtained by crushing rocks, and these fibers are used in manufacturing asbestos products like pipes and sheets.

The Tribunal concluded that the process applied by the respondents resulted in the production of asbestos fibers by separating them from the rocks, creating a new excisable commodity distinct from the parent product. This classification was consistent with previous decisions on the classification of asbestos products. Therefore, the Tribunal held that the orders of the Appellate Collector setting aside the Assistant Collector's orders were incorrect. The appeals were allowed, the orders of the Appellate Collector were set aside, and the orders of the Assistant Collector were restored.