TMI Blog1985 (7) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... aid factory, the petitioner has a Research and Development Cell in a separate building about 100 metres from the factory and within the same campus where amongst other activity, the petitioner mixes pigment powders like titanium dioxide with certain solvents. These pigment powders and solvents are obtained from the market and are products upon which the duty of excise has been paid. After adding preservatives, the mixture of pigment powder and solvents become slurry. This slurry is used directly by the petitioner in the tanning of leather and is part and parcel of the process to obtain finished leather. Similarly, in the case of nitrocellulose lacquer, certain chemicals such as nitrocellulose, alkydes etc. are combined with solvents with or without water, with or without pigments depending upon the end use. The resultant mixture is also used by the petitioner for manufacture of finished leather. The pigment slurry as well as nitrocellulose lacquer are used for captive consumption in the petitioner's factory. Under Notification No. 80/80, the Central Government exempted excisable goods specified therein from the whole of the duty of excise leviable thereon if the first clearances di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rospective effect from the date of framing of the rules. 3. In the month of October 1980 Officers of the Enforcement Branch of the Excise Department visited the factory and threatened to seize the existing stock of pigment slurry and nitrocellulose lacquer as they were manufacturing and clearing them without a vaild licence and without paying excise duty leviable thereon and the petitioner was made to apply for a licence on 29-10-1980 under Rule 176. However, the petitioner by their letter dated 10-11-1980 pointed out that it is not manufacturing water pigment finishes for leather but only mixing pigment with certain solvents with a view to convert pigment from dry form to slurry. Similarly, in case of nitrocellulose lacquer, certain chemicals are mixed with solvents and there is no manufacture. The products so mixed are used for completion of manufacture of finished leather. The said pigment slurry and nitrocellulose lacquer are used in the single stream of production of finished leather and do not ever leave the factory or the place of manufacturing nor are the same ever sold or supplied to the open market. The pigment slurry so produced is not a marketable product. So the clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haracter or use. Relying on this decision, the Supreme Court in South Behar Sugar Mills v. Tata Chemicals - 1978 E.L.T. (J 336) = AIR 1968 S.C. 922 further held that there must be such a transformation that a new and different article must emerge having a distinctive name, character or use. In Sandoz India Ltd. v. Union of India - 1980 E.L.T. 696 a Division Bench of the Bombay High Court held that the processing of the physical form from a solid state to a liquid state by the addition of dispersing agents and water did not result in manufacture as there was no change in the chemical composition of the pigment. In Shakti Insulated Wires v. Union of India - 1982 E.L.T 10, the Bombay High Court further held that it is obvious that merely because some process is carried on any article it would not necessarily amount to a manufacture of a fresh article amounting to 'manufacture' under Section 2(f) of the Act. In Coromandel Proorite v. Government of India - 1985 (20) E.L.T. 257 a Division Bench of the Madras High Court held that if as a result of the process, raw-materials have been transformed into a distinct and commercially new product, then alone the process can be taken to be a manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there is no change in the end product. Again in the affidavit of the Asstt. Collector dated 8-4-1982 it was admitted that the petitioner is manufacturing pigment slurry without using film former for processing the leather. The Supreme Court in Dunlop India v. Union of India - 1983 E.L.T. 1566 (S.C.) = AIR 1977 S.C. 597 held that classification of articles with reference to their end-use is totally irrelevant. It is, therefore, clear that petitioner is not manufacturing water pigment finishes for leather which is leviable to excise duty under Item No. 14-I(2)(iii) of the First Schedule. But this cannot be said so far as nitrocellulose lacquer which is being prepared by the petitioner in its factory by mixing certain chemicals such as nitrocellulose, alkyds and combined with solvents with or without water and with or without pigment depending upon the end-use. So the resultant product is something different from the ingredients used for making them and so the petitioner is manufacturing nitrocellulose lacquer which is leviable to duty under Item No. 14-III (i) of the First Schedule. But as the finished product of the petitioner i.e. leather goods, are totally exempted from excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as recovery of duty not levied or not paid or short levied or short paid or erroneously refunded has to be done in accordance with the provisions of the Act and the rules as in force from time to time, therefore, there is no unreasonableness on account of length of retrospectivity of the amendment and Section 51 of the Finance Act, 1982 and Rules 9 and 49 of Central Excise Rules as amended are vaild." The only question that now survives for consideration is the contention of the respondents that since the petitioner had an alternative remedy of appeal u/s 35 of the Central Excise Act against the impugned orders, the present petition is not tenable. The Supreme Court in Hirday Narain v. Income-tax Officer, Bareilly AIR 1971 S.C. 34 held that once a writ petition has been entertained and the alternative remedy was time-barred, the petition should be held to be maintainable. Following this decision, this Court has held in a series of decisions that once a petition has been admitted, it could not be dismissed on the ground of alternative remedy. The unreported decision in Bharat Commerce Industries v. Union of India - M.P. No. 351/80, dated 2-11-1983 is clearly distinguishable becau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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