1988 (7) TMI 297 - AT - Central Excise

Summary

Issues: Classification of products under Item-68 CET and excisability of bleached cotton linters, cellulose powder, and micro-crystalline cellulose powder.

In the case, the appellants, M/s. Reliance Cellulose Products Ltd., were called upon to show cause why bleached cotton linters, cellulose powder, and micro-crystalline cellulose powder should not be classified under Item-68 CET and duty demanded. The appellants contended that the processes involved did not amount to manufacture to attract excise duty as they were merely purification processes without significant physical or chemical changes. The Department argued that chemical reactions did occur during the processes, resulting in distinct products with different characteristics and uses. The Assistant Collector and the Collector (Appeals) classified the products under Item-68 CET, leading to the appeal.

The main contention was whether the processes involved in producing the products constituted manufacturing for excise duty purposes. The appellants argued that the processes were purification steps without significant changes, while the Department contended that chemical reactions occurred, leading to distinct products. The dispute centered on whether the processes amounted to manufacture under excise law.

The show cause notice highlighted the differences between raw cotton linters and bleached cotton linters, emphasizing the chemical changes during the purification process. The appellants disputed this, claiming only physical changes occurred. The Department argued that the removal of lignin from the linters involved a chemical reaction, citing authoritative sources. The Tribunal found that chemical reactions did occur during the processes, leading to the conclusion that the processes amounted to manufacturing.

Additionally, the appellants argued that the conversion of cellulose into powder or micro-crystalline powder did not constitute manufacturing. However, the Tribunal focused on the distinct characteristics and uses of each product, similar to a previous case involving soap-stone grinding. The Tribunal held that each product had unique characteristics and uses, justifying their classification under Item-68 CET and the levy of duty.

Ultimately, the Tribunal upheld the lower authorities' classification of the products under Item-68 CET, dismissing the appeal. The decision was based on the finding that the processes involved in producing the products amounted to manufacturing under excise law, considering the chemical reactions and distinct characteristics of the final products.