1987 (5) TMI 217 - AT - Central Excise

Summary

Issues:
- Whether the processing of graphite ores for obtaining graphite flakes amounts to manufacture.
- Whether the appellants are eligible for exemption under Notification No. 23/55.
- Whether a duty is leviable on the graphite produced by the appellants.
- Whether a license is required for the production of graphite flakes.
- Whether a penalty is leviable for manufacturing goods without a license.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the manufacturing process of graphite flakes from graphite ore. The Collector (Appeals) had held that the graphite manufactured was liable to duty under T.I. 68 and imposed a penalty. The main contention was whether the processing of graphite ores constituted manufacture. The appellants argued that the graphite flakes obtained were a natural product and not subject to duty. However, they later claimed exemption under Notification No. 23/55 for minerals like graphite. The Tribunal noted that by seeking this exemption, the appellants acknowledged that they were producing goods subject to Central Excise levy, thereby implying that the processing of graphite ore amounted to manufacture.

Regarding the exemption under Notification No. 23/55, the Tribunal agreed with the appellants that graphite fell under the category of exempted minerals without any conditions attached. Therefore, the duty demanded from the appellants was deemed not maintainable in law. Additionally, the Tribunal ruled that since the goods were exempted from duty, no license was required for their production. Consequently, the penalty imposed for manufacturing goods without a license was set aside.

The Tribunal refrained from delving into other points raised in the appeal, including whether the processing of ore for graphite production constituted manufacture creating goods with different characteristics. It was noted that the appellants did not press this point during the proceedings. Ultimately, the Tribunal allowed the appeal based on the exemption under Notification No. 23/55 and the consequent non-requirement of a license for production, leading to the dismissal of the duty demand and penalty levied on the appellants.