1989 (5) TMI 202 - AT - Central Excise

Summary

Issues:
- Appeal against order rejecting exemption under Notification No. 118/75-C.E.
- Determination of whether the machinery is meant for producing or processing goods.
- Interpretation of the definition of manufacture and processing of goods in the context of excise laws.

Analysis:
The appellant, a paper manufacturer, filed an appeal challenging an order holding them liable for excise duty on a Fibre Recovery plant and rejecting their claim for exemption under Notification No. 118/75-C.E. The plant was used to retrieve fibre particles from waste effluent water. The Assistant Collector imposed duty, penalty, and ordered confiscation, which was partially set aside by the Collector (Appeals). The main issue was the eligibility for exemption under the notification, which both authorities had rejected.

The Notification No. 118/75-C.E. exempts goods manufactured in a factory for use within the same factory or another factory of the same manufacturer, except for complete machinery meant for producing or processing goods. The appellant argued that the plant only retrieved fibre particles and did not process goods. The Departmental Representative contended that the plant was complete machinery for processing goods, citing definitions from the Indian Factories Act, 1948.

The Tribunal analyzed the definition of manufacture and processing of goods under excise laws. It noted that manufacturing involves producing something new from existing materials, resulting in a distinct article. Processing goods leads to a transformation into a new article for market use. The Tribunal determined that retrieving lost fibre from waste did not constitute processing goods, as no new distinct article was created. The waste fibre or water did not qualify as goods for market sale. Therefore, the plant was not meant for producing or processing goods, entitling the appellant to the claimed exemption under Notification No. 118/75. The appeal was allowed, setting aside the lower authorities' orders.