1986 (2) TMI 250 - AT - Central Excise

Summary

Issues involved: Review proceedings u/s 36(2) of the Central Excises and Salt Act, 1944 regarding whether processing of Formic Acid dilute of 65% strength into Formic Acid of 85% strength constitutes manufacture under Section 2(f) of the Act.

Summary:
1. The Central Government initiated review proceedings challenging the Order-in-appeal by the Collector of Central Excise (Appeals) Bombay regarding the classification of processing Formic Acid. The Collector held that the processing did not amount to manufacture under Section 2(f) of the Act and should not be included in the computation of annual clearances for Notification No. 176/77-C.E.

2. The main issue was whether the processing of Formic Acid from 65% to 85% strength constitutes manufacture under Section 2(f) of the Act and if the value of clearances should be included for computation purposes.

3. The appellant argued that the processing involved a manufacturing process as defined in the Act, resulting in a marketable product different from the original diluted Formic Acid received. They used a desiccating agent to concentrate the acid and applied for a patent for the product.

4. The respondents contended that the process of increasing the strength of Formic Acid did not amount to manufacture as no new product emerged, citing chemical properties remaining the same before and after processing.

5. The learned Consultant argued that increasing the strength of Formic Acid did not constitute manufacture under the Act, referencing previous tribunal decisions and Ministry of Finance letters supporting their position.

6. The arguments included whether duty was already paid on the imported Formic Acid and the distinction between different cases based on duty payment.

7. The Tribunal upheld the Collector's decision, stating that the process of concentrating Formic Acid did not result in a new product, therefore not constituting manufacture under Section 2(f) of the Act. The decision was supported by legal precedents and the lack of a distinct new commodity emerging from the processing.

8. Consequently, the Tribunal dismissed the review proceedings, affirming that the processing of Formic Acid from 65% to 85% strength did not amount to manufacture, and the value of clearances was not to be included in the computation for Notification No. 176/77-C.E.