2000 (3) TMI 146 - AT - Central Excise

Summary

Issues involved: Determination of whether the process of air blowing of bitumen amounts to manufacture and the levy of duty on blown bitumen when the original bitumen has already paid duty.

Summary:
In the present case, the Appellate Tribunal CEGAT, Mumbai considered the question of whether the process of air blowing of bitumen derived from petroleum constitutes manufacture and if duty is chargeable on the resulting blown bitumen. The Collector and Assistant Commissioner had ruled in the affirmative, relying on a previous Tribunal decision. The appellant contested this decision, arguing that the process does not amount to manufacture based on technical literature and the Board's consistent view.

The Tribunal examined the technical literature extensively, particularly focusing on the chemical changes brought about by blowing air through molten bitumen. It noted that the increase in softening point and reduction in ductility resulting from this process do not fundamentally alter the product's essential properties or uses, such as road surfacing and waterproofing. The Tribunal disagreed with the notion that blowing bitumen creates a distinct commodity warranting separate classification.

Furthermore, the Tribunal highlighted inconsistencies in the interpretation of tariff classifications, emphasizing that blown bitumen remains under the same heading as unblown bitumen in the Harmonised System of Nomenclature. It also referenced previous rulings and trade notices indicating that both types of bitumen should be classified under the same item.

Additionally, the Tribunal referenced legal precedents to support its conclusion that not all chemical changes amount to manufacture. It cited cases where similar processes did not alter the essential nature of the product. Ultimately, the Tribunal concluded that the unanimity in technical literature and official views precluded the classification of air blowing as a manufacturing process.

Moreover, the Tribunal found procedural flaws in the show cause notices issued, rendering the demands for duty unsustainable. It highlighted jurisdictional issues and lack of intent to evade duty as further grounds for setting aside the impugned orders.

Based on the above considerations, the appeals were allowed, and the orders imposing duty on blown bitumen were overturned.