2000 (12) TMI 283 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 191/87 regarding duty exemption for explosives used in the manufacture of zinc and lead concentrates.
2. Determination of whether explosives used in mining operations for obtaining copper ores are eligible for the duty exemption under Notification No. 191/87.
3. Analysis of the interdependence between mining operations and manufacturing processes in the context of duty exemption eligibility.
4. Application of legal precedents to interpret the phrase 'in the manufacture of' in Central Excise Notifications.

Issue 1:
The appeals involved a dispute over the interpretation of Notification No. 191/87 granting duty exemption for explosives used in the manufacture of zinc and lead concentrates. The Department argued that explosives were not directly used in the manufacturing process, thus challenging the eligibility for duty exemption. The Commissioner (Appeals) overturned the Assistant Collector's decision, stating that mining operations and manufacturing processes were integrated, making explosives used in mining eligible for duty exemption. This led to the Revenue's appeal.

Issue 2:
In another case, the appellants were engaged in manufacturing copper concentrates and used explosives in mining operations to extract copper ores. The Revenue issued show cause notices proposing duty recovery, claiming that explosives were not used in the manufacture of copper concentrates, thus challenging the duty exemption under Notification No. 191/87. The Commissioner of Central Excise upheld the duty demand, leading to the appeals by the appellants.

Issue 3:
The Tribunal analyzed the interdependence between mining activities and the manufacturing process of final products from the extracted ores. It concluded that explosives used in blasting mines to obtain raw materials for manufacturing zinc and copper concentrates were considered as being 'in the manufacture of' the concentrates. This view was supported by legal precedents emphasizing the interdependent nature of mining and manufacturing processes.

Issue 4:
Legal precedents, such as the Indian Farmers Fertilizers Cooperative Ltd. case and the Indian Copper Corporation case, were cited to interpret the phrase 'in the manufacture of' in Central Excise Notifications. The Tribunal rejected the Revenue's argument that explosives were not directly used in manufacturing processes, emphasizing the interdependence of mining and manufacturing activities. It relied on precedents to establish that equipment's function remains the same regardless of the specific law under consideration, thus affirming the eligibility of explosives for duty exemption under Notification No. 191/87. The Tribunal upheld the impugned order in one appeal and allowed the appeals of the appellants in another, settling the dispute regarding duty exemption for explosives used in mining operations for manufacturing concentrates.