Full Judgment Text
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CASE NO.:
Appeal (civil) 77-80 of 2001
Appeal (civil) 765-768 of 2001
Appeal (civil) 1074 of 2001
PETITIONER:
Commissioner of Central Excise, Chandigarh-I
Collector of Central Excise, Chandigarh
Commissioner of Central Excise, Kanpur
RESPONDENT:
M/s. Markfed Vanaspati and Allied Indus. & Ors
M/s. Markfed Vanaspati & Allied Industries
M/s. Motilal Padampat Udyog Ltd.
DATE OF JUDGMENT: 09/04/2003
BENCH:
S.N. Variava & H.K. Sema.
JUDGMENT:
J U D G M E N T
Variava, J.
These appeals are against the judgment of the larger bench of
the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT).
The question for consideration is whether "spent earth" is liable to
excise duty or not. Under the Tariff, prior to its amendment in 1985, it
had been consistently held that "spent earth" was not liable to duty.
However, with the enforcement of new Tariff in 1985, a conflict arose
between various benches of the Tribunal. Some benches held that
"spent earth" was still not excisable, whereas other benches held that,
as it now stood included by a specific sub-heading, it became
excisable. In view of these conflicting decisions, the matter was
placed before the larger Bench of the CEGAT which by the impugned
judgment has held that "spent earth" was still not dutiable. Hence
these Appeals.
The only question for consideration for us is whether a goods
becomes excisable merely because it falls within a tariff item. After
1985 Tariff item 1507 reads as "residue resulting from the treatment
of fatty substances". It is submitted that "spent earth" is a residue
resulting from treatment and is thus now excisable. What we have to
consider is whether the well settled twin tests of "manufacture and
marketability" cease to apply if a good falls within a tariff entry.
Prior to this Entry being introduced in 1985, it had been
consistently held that "spent earth" was not manufactured. It had
been consistently held that "spent earth" remained "earth" even after
processing. It had been consistently held that all that happened was
that its capacity to absorb was reduced. It had been consistently held
that duty having been paid on "earth", no duty was leviable on "spent
earth" as it remained the same product. It had been held that to levy
duty on "spent earth" would amount to levying duty twice. It is on
this ground that it has been held that "spent earth" was not excisable.
Even now it has not been shown that there is manufacture. The only
submission is that "spent earth" is a residue resulting from the
treatment of fatty substances. The submission is that now that there
is a specific Entry which makes "residue resulting from the treatment
of fatty substances" excisable, duty has to be paid on "spent earth".
In other words, what is submitted is that merely because a good falls
within one of the Tariff items it becomes excisable.
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In support of their submission, reliance is placed on the case of
Lal Woollen & Silk Mills (P) Ltd., Amritsar vs. Collector of Central
Excise, Chandigarh reported in 1999 (4) SCC 466. In this case the
question was whether excise duty was to be paid on dyed worsted
woolen yarn made from duty paid worsted woolen grey yarn. It was
argued that there was no manufacture. The Court however held as
follows:
"Admittedly both "dyed yarn" and "grey yarn" are covered
by two separate distinct heads of tariff items with different
duty. So this itself recognizes them to be two different
goods with separate levy. In view of this it cannot be
urged that there is no manufacture of "dyed yarn" from
the "grey yarn".
Undoubtedly this authority appears to support the contention which is
raised.
However, it appears to us that the observation made in this
authority are "per incuram". In so observing, the decision of a larger
Bench of this Court in the case of Collector of Central Excise, Indore
vs. Universal Cable Ltd. reported in 1995 Supp (2) SCC 465, has not
been noted or considered. In this case an argument that a good
become excisable because it is covered by Tariff Entry, has been
negatived. In the case of B. P. L. Pharmaceuticals Ltd. vs. Collector of
Central Excise reported in 1995 Supp (3) SCC 1 it has also been held
that merely because there is a change in the Tariff Item the goods
does not become excisable. Subsequently in a judgment dated 13th
February, 2003 in Civil Appeal No. 6745 of 1999 it has been held that
merely because an item falls in a Tariff Entry, it does not become
excisable unless there is manufacture and the good is marketable. In
Lal Woolen & Silk Mills’ case (supra) it has not been held that the twin
test of manufacture and marketability is not to apply. It is not
possible to accept the contention that merely because an item falls in a
Tariff Entry it must be deemed that there is manufacture. The law still
remains that the burden to prove that there is manufacture and that
what is manufactured is on the revenue. In this case no new
evidence is placed to show that there is manufacture. "Spent earth"
was "earth" on which duty has been paid. It remains earth even
after the processing. Thus if duty was to be levied on it again, it would
amount to levying double duty on the same product.
Under the circumstances, we find no infirmity in the impugned
judgment. The Appeals stand dismissed. There shall be no order as
to costs.