1991 (2) TMI 237 - AT - Central Excise

Summary

Issues:
- Admissibility of refund claims filed by the appellants for products Natrin, Nodin, and Bactin under Central Excise Act, 1944.
- Determination of whether the process undertaken by the appellants amounts to "manufacture" under Section 2(f) of the Central Excises & Salt Act, 1944.
- Comparison of the appellants' products with yeast and classification under Tariff Item 68 CET.

Analysis:

1. Admissibility of Refund Claims:
The appeal was filed against the rejection of refund claims totaling Rs. 2,82,354.33 by the Collector of Central Excise (Appeals), Bombay. The appellants claimed that their products did not fall under any Tariff Item as they argued that the products, consisting of living micro-organisms isolated and multiplied under suitable conditions, did not undergo a manufacturing process. The Assistant Collector and the Collector (Appeals) rejected the claims, asserting that the process of isolating and multiplying micro-organisms constituted manufacturing under Section 2(f) of the Act.

2. Manufacture Determination:
The appellants contended that their process did not amount to manufacture as no new product emerged from the raw material. They cited a Bombay High Court decision and Supreme Court judgments emphasizing the emergence of a new product as a crucial element of manufacturing. However, the Department argued that the process involved in isolating useful microbes from soil, culturing, and formulating them into crop-specific products constituted manufacturing, relying on a Supreme Court decision defining manufacture as the transformation of a product into a new commercial commodity.

3. Comparison with Yeast and Classification:
The Collector (Appeals) noted that the appellants' products were marketed as bio-fertilizers similar to yeast, classified under Tariff Item 68 CET. The appellants failed to effectively distinguish their products from yeast, leading the Collector to rely on Ministry clarifications stating that yeast is a manufactured product under Item 68. The Tribunal found that the appellants' products, marketed as formulated soil inoculants, were distinct from the starting material, soil, and fell under the definition of manufacture as per the Act.

In conclusion, the Tribunal upheld the decision of the Collector (Appeals), rejecting the appeal and affirming that the process undertaken by the appellants, from isolating useful microbes to marketing formulated soil inoculants, constituted manufacturing as it resulted in distinct branded products different from the starting material. The Tribunal's analysis aligned with the definition of manufacture provided in relevant legal precedents and held that the appellants' products were excisable under the Central Excise Act, 1944.