Judgment:
1. The appellants are engaged in the manufacture of chemicals additives falling under Chapter 38 of this Schedule to he Central Excise Tariff Act, 1985. In the Course of manufacture of such chemicals, during the process of filtration a waste emerges, viz. "Waste Filtration Cake" (herein after referred as WFC). The appellants, prior to the period under dispute, were dumping such WFC as a land filling and around in the manufacturing premises on removing the same on internal challans.
During the period 1994-95 to 1998-99, they located certain industries engaged in treating toxic wastes and invited tenders for clearance of WFC by such industries. WFC was then cleared on their own challans at nil rate of duty to them.
2. As per the technical report relied in the notice 33% oil by weight can be extracted from this WFC and it was considered as an excisable product. The appellants contested the same to be non-marketable and non-excisable. The impugned order upheld classification under Heading 38.23 of the Central Excise Tariff and confirmed the duty demand for the year. Findings were based on the observation that the item cleared was used by the various job workers for processing a value-added item, viz. Calcium Petroleum Sulphonate, and on the basis of these said price of this Sulphonate, duty demand of Rs. 1,68,12,710.81/- was confirmed alongwith the penalty of equivalent amount under Section 11AC for the period 28/9/96 to December, 1998 and January, 1999 to December, 1999 and interest under Section 11AB was also demanded.
3. We have heard both the sides and considered the submissions and find :- (a) in the case of Markfed Vanaspati & Allied Industries v. Commissioner of Central Excise, Chandigarh [2000 (116) ELT 204 (Tribunal)], the Larger Bench of the Tribunal, after considering the matter, came to conclusion that spent earth, arising during the course of processing and refining of edible oil, which had absorbed impurities and traces of oil, would not be dutiable. In that case, the clay was not used for manufacturing, but was only used for deodouring, bleaching and decolouring of oil. In the present case, the siliceous material in the said WFC, arises out of a process of filtration of impurities in the oil. Therefore, we agree with this submission of the appellants and we are of the view that the findings in the case of Larger Bench's decision which were not before the Adjudicator are relevant to consider whether manufacturer had taken place of WFC in this case. We would therefore, set aside the impugned order and remand the matter back to the Original Authority to re-adjudicate the case, in the light of the law laid on manufacturer in Larger Bench's decision, in the case of M/s.
Lubrizol India Pvt. Ltd. (Supra).
4. In view of our findings, we set aside this order and remand the matter back to the Adjudicating Authority for re-determining the case, While determining the question of 'manufacture' in this case, we make it clear that we leave all issues open, to both sides.