1987 (11) TMI 271 - AT - Central Excise

Summary

Issues:
- Whether Ossein and Gelatine manufactured from crushed bones and chemicals qualify for exemption under Notification No. 221/79-CE.

Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi involved the question of whether Ossein and Gelatine produced by the respondents from crushed bones and chemicals are eligible for exemption under Notification No. 221/79-CE. The respondents contended that Ossein and Gelatine are bone products as they are derived from crushed bones, citing the manufacturing process involving the dissolution of bones with Phosphoric acid to obtain Ossein, and further processing to obtain Gelatine. They argued that if Di-calcium phosphate, also derived from bones, is eligible for the exemption, there is no reason to exclude Ossein and Gelatine. The respondents emphasized that Ossein and Gelatine are bone products as per industry standards and specifications, despite not retaining visible bone characteristics after processing.

On the contrary, the appellant Collector argued that Ossein and Gelatine are chemical products, not bone products, as they undergo significant chemical treatment involving acids and alkalis, resulting in a change of physical properties from crushed bones. The Collector maintained that for a product to be considered a bone product under the notification, it must retain the principal characteristics and physical properties of crushed bones. Therefore, the Collector contended that Ossein and Gelatine should not be considered bone products eligible for the exemption.

After careful consideration, the Tribunal sided with the respondents, concluding that Ossein and Gelatine qualify as bone products eligible for the exemption under Notification No. 221/79-CE. The Tribunal emphasized that the key factor in determining a product's classification is the principal raw material used in its production, which in this case is crushed bones. The Tribunal noted that since Di-calcium phosphate, another bone-derived product, was deemed eligible for the exemption in a previous order, there is no justification to exclude Ossein and Gelatine. The Tribunal rejected the Collector's argument that the processed products should be classified as chemicals, affirming that Ossein and Gelatine are indeed bone products as they originate from crushed bones. Consequently, the appeal was dismissed, and the impugned order confirming the eligibility of Ossein and Gelatine for the exemption was upheld.