Collector of Central Excise Vs. Hindustan Mineral Traders and - Court Judgment

Excerpt:
1. the two appeals were heard together as the issue for decision in both is the same.2. after issue of notice that excisable product falling under item 22-f was being manufactured by the respondents m/s. hindustan mineral traders and m/s. karnataka asbestos but they had not taken out the necessary licence therefor, the assistant collector in his orders dated 2-12-1981 and 29-3-1982 confirmed demand for payment of duty and also imposed a penalty of rs. 50/- on each of the respondents. on appeal the said orders were set aside by the appellate collector under his orders, dated 24-6-1982 and 5-10-1982. it is against the said orders that these appeals have been preferred by the collector of central excise, bangalore. according to the appellate collector the crushing of asbestos stone into powder by the respondents did not amount to manufacture attracting the central excise duty.3. we have heard shri k.c. sachar for the appellant collector and shri m.i. shah for the respondents.4. admittedly the respondents crush asbestos rocks/lumps to powder. the case for the appellant collector is that the asbestos fibre in the rocks is thus separated by the crushing of the rocks and the resultant product being asbestos fibre the same is classifiable under item 22-f(4) cet and since thus an excisable product is brought into existence by the process applied by the respondents to the rocks the said process of crushing of the rocks to separate the fibres amounts to manufacture under section 2(f) of the central excises and salt act.5. shri shah relies upon the decisions in 1983 (13) elt 1542 (s.c.) : 1983 elt 537 to contend that mere crushing of rocks to powder would not amount to manufacture. but it should be noted that in the said cases the only transformation was from rock to powder, no excisable product distinct from the rock having come into existence by reason of process of crushing. shri shah contends that in the present case also fibres were not separated and did not come into existence by reason of crushing since the rocks crushed by the respondents were of amphibole variety which have no fibres, the chrysotle variety of asbestos alone having fibres. no such contention appears to have been put forward in these terms before the lower authorities. in any event we find that this contention would not be correct. in the mcgraw-hill encyclopaedia of science & technology (5th edition) it is found stated at page 744 of vol. i that asbestos is the general name for the useful, fibrous varieties of six rock forming minerals. specifically dealing with amphibole asbestos it is stated "the fibrous amphiboles that are termed asbestos are generally more heat and acid resistent than serpentine asbestos, though not as slurry, alkali resistent is available. these fibrous amphibole include...".similarly in the new encyclopaedia britannica, micropaedia (15th edition) we find stated at page 568 of vol. 1 that asbestos is mineral fibre occurring in nature in fibrous form and that it is obtained from certain types of asbestos rock, chiefly the chrysotile variety. it is further stated that the fibre is freed by crushing the rock and is then separated from the surrounding material, usually by a blowing process.in the materials handbook by brady and clauser (11th edition) it is stated in page 64 that asbestos is a general name for several varieties of fibrous minerals, the several varieties being subsequently described and discussed including the amphiboles, the chrysotile etc. on a perusal of these books it is found that the only distinction between the fibres obtained from the chrysotile and those obtained from amphibole is that while the former yields fibres of some length the latter yields fibres of short length. it also appears that while fibres of the longer length could be woven the fibres of shorter length could not and hence these fibres of shorter length are used in the manufacture of other asbestos products such as pipes, sheets etc. it is evidently for the manufacture of such products that the fibre obtained by the crushing process of the respondents is used.6. we are, therefore, satisfied that the process applied by the respondents to the asbestos rocks resulted in the production of asbestos fibres by separation thereof from the rocks and that it was for the purposes of such separation that the crushing process was carried out and therefore the said process amounted to manufacture of a new excisable commodity distinct from the parent product and falling under item 22-f cet. this classification is also consistent with the decision of this tribunal on the classification of asbestos fluff in collector of central excise, jaipur v. sri pratap commercial co. (p) ltd., bhilwara reported in 1984 ecr 1877 and on the classification of asbestos powder in collector of central excise, jaipur v. leo minerals and multi mineral processing industries. [order nos. 509 and 510/87-d dated 29-6-1987 in central excise appeals nos. 49 & 50/1983-d].7. accordingly we hold that the orders of the assistant collector were right and that the orders of the appellate collector setting aside orders of the assistant collector were incorrect. accordingly these appeals are allowed, the orders of the appellate collector are set aside and the orders of the assistant collector are restored.

Judgment:
1. The two appeals were heard together as the issue for decision in both is the same.

2. After issue of notice that excisable product falling under Item 22-F was being manufactured by the respondents M/s. Hindustan Mineral Traders and M/s. Karnataka Asbestos but they had not taken out the necessary licence therefor, the Assistant Collector in his orders dated 2-12-1981 and 29-3-1982 confirmed demand for payment of duty and also imposed a penalty of Rs. 50/- on each of the respondents. On appeal the said orders were set aside by the Appellate Collector under his orders, dated 24-6-1982 and 5-10-1982. It is against the said orders that these appeals have been preferred by the Collector of Central Excise, Bangalore. According to the Appellate Collector the crushing of asbestos stone into powder by the respondents did not amount to manufacture attracting the Central Excise duty.

3. We have heard Shri K.C. Sachar for the appellant Collector and Shri M.I. Shah for the respondents.

4. Admittedly the respondents crush asbestos rocks/lumps to powder. The case for the appellant Collector is that the asbestos fibre in the rocks is thus separated by the crushing of the rocks and the resultant product being asbestos fibre the same is classifiable under Item 22-F(4) CET and since thus an excisable product is brought into existence by the process applied by the respondents to the rocks the said process of Crushing of the rocks to separate the fibres amounts to manufacture under Section 2(f) of the Central Excises and Salt Act.

5. Shri Shah relies upon the decisions in 1983 (13) ELT 1542 (S.C.) : 1983 ELT 537 to contend that mere crushing of rocks to powder would not amount to manufacture. But it should be noted that in the said cases the only transformation was from rock to powder, no excisable product distinct from the rock having come into existence by reason of process of crushing. Shri Shah contends that in the present case also fibres were not separated and did not come into existence by reason of crushing since the rocks crushed by the respondents were of Amphibole variety which have no fibres, the chrysotle variety of asbestos alone having fibres. No such contention appears to have been put forward in these terms before the lower authorities. In any event we find that this contention would not be correct. In the McGraw-Hill Encyclopaedia of Science & Technology (5th Edition) it is found stated at page 744 of Vol. I that asbestos is the general name for the useful, fibrous varieties of six rock forming minerals. Specifically dealing with amphibole asbestos it is stated "the fibrous amphiboles that are termed asbestos are generally more heat and acid resistent than serpentine asbestos, though not as slurry, alkali resistent is available. These fibrous amphibole include...".

Similarly in the New Encyclopaedia Britannica, Micropaedia (15th Edition) we find stated at page 568 of Vol. 1 that asbestos is mineral fibre occurring in nature in fibrous form and that it is obtained from certain types of asbestos rock, chiefly the chrysotile variety. It is further stated that the fibre is freed by crushing the rock and is then separated from the surrounding material, usually by a blowing process.

In the Materials Handbook by Brady and Clauser (11th Edition) it is stated in page 64 that Asbestos is a general name for several varieties of fibrous minerals, the several varieties being subsequently described and discussed including the amphiboles, the chrysotile etc. On a perusal of these books it is found that the only distinction between the fibres obtained from the chrysotile and those obtained from amphibole is that while the former yields fibres of some length the latter yields fibres of short length. It also appears that while fibres of the longer length could be woven the fibres of shorter length could not and hence these fibres of shorter length are used in the manufacture of other asbestos products such as pipes, sheets etc. It is evidently for the manufacture of such products that the fibre obtained by the crushing process of the respondents is used.

6. We are, therefore, satisfied that the process applied by the respondents to the asbestos rocks resulted in the production of asbestos fibres by separation thereof from the rocks and that it was for the purposes of such separation that the crushing process was carried out and therefore the said process amounted to manufacture of a new excisable commodity distinct from the parent product and falling under Item 22-F CET. This classification is also consistent with the decision of this Tribunal on the classification of asbestos fluff in Collector of Central Excise, Jaipur v. Sri Pratap Commercial Co. (P) Ltd., Bhilwara reported in 1984 ECR 1877 and on the classification of asbestos powder in Collector of Central Excise, Jaipur v. Leo Minerals and Multi Mineral Processing Industries. [Order Nos. 509 and 510/87-D dated 29-6-1987 in Central Excise Appeals Nos. 49 & 50/1983-D].

7. Accordingly we hold that the orders of the Assistant Collector were right and that the orders of the Appellate Collector setting aside orders of the Assistant Collector were incorrect. Accordingly these appeals are allowed, the orders of the Appellate Collector are set aside and the orders of the Assistant Collector are restored.