PET PLASTICS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) AFTER hearing both sides, on these applications, arising out of the common order of the Commissioner of Central Excise (Appeals), it is found that the core issue revolves around whether the applicant M/s. Suprati Plastic Ltd. conducted any operations on the raw materials, in the EOU licence granted to them i.e. on Ascorbic Acid IP/BP grade received from M/s. Vishal Exports Overseas Ltd. and supplied back to them as well as on '15 MTs of such Ascorbic Acid IP/BP grade purchased from Pet Plastics Unit in the SEEPZ, Kandla.

(2.) THE case of the EOU manufacturer is that the Ascorbic Acid IP/BP grade procured by them was subjected to the process of coaling by various permitted chemicals, such coatings a trial production was removed to DTA on the ground that the said goods did not meet the export quality standards of Ascorbic acid coaled. From the impugned order, we find that the Commissioner has relied upon the lesl reports of M/s. ITALAB, Mumbai who have lested the producl at the receipt in to the premises and the producl after processing undertaken removed from the EOU. The perusal of these two lesl reports, as placed in the file, reveals that the percentage of ascorbic acid, on assay basis, falls from 99% to 96% or so, as well as the Lab has certified that while the produce received in the EOU on tesl meets the specification of Ascorbic Acid IP/BP grade, the producl removed did not meet the specifications of Ascorbic Acid IP/BP grade. This when read with the relied upon certificate, of Professor K.G. Akamanchi, Head Pharmaceutical Division of Institute of Chemical Technology (Autonomous), University of Mumbai, certifying that "the process of mixing ascorbic acid with Sleryl Alcohol and Isopropyl Alcohol results in Ascorbic Acid coated and after this coating process no change in either chemical structure or the intrinsic properties of Ascorbic Acid occurs and accordingly the end usage of Ascorbic Acid continues to remain the same" would lead to a conclusion that commercially a different product arises. In this view of the mailer, and relying on the Supreme Court's decision in the case of Laminated Packings Ltd. and on finding that (here is a new commercially identifiable Ascorbic Acid coining into existence, finding a market, known to the persons dealing with that product, we would find manufacture as understood under the Central Excise Act, 1944 read with Central Excise Tariff Act, 1985 to have taken place. The plea of the Id. D.R. that different grade would remain classified in the same heading, cannot be accepted to call for 'no manufacture' having taken place.

(3.) WE also find that the Id. Advocate for the assessee EOU has taken us through the definition of 'manufacture' as used and stipulated in the Exim Policy and find that this definition has not changed. The definition, on a perusal, reveals that it would encompass activities and process which are not in the normal course be covered under the definition of 'manufacture' as provided for under Section 2(f) of the Central Excise Act, 1944. The Id. Advocate took us through various decisions of this Tribunal, which have stipulated and laid down that the process envisaged of manufacture, in an EOU are much more wide and in its contents covers a larger area and than the process of manufacture under Section 2(f). In this view of the matter, we do not find a prima facie case to uphold the contention of the Revenue that no manufacturing activity look place on the subject Ascorbic Acid received/procured by the appellant EOU and cleared thereafter to DTA. If that be so, prima facie we cannot uphold the demand of duties and liability as to penalties as arrived at. In this view of the matter, we would grant full waiver of duty and penalties in these applications made for the purposes of Section 129E of the Customs Act, 1962 and stay recovery thereof pending the appeals.