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2015 (10) TMI 2398 - CESTAT BANGALORE

2015 (10) TMI 2398 - CESTAT BANGALORE - 2015 (324) E.L.T. 591 (Tri. - Bang.) - Manufacture - captive consumption - Department contends that the UDMH manufactured by the appellant and used for mixing with HH in the ratio of 75:25 has to be treated as an intermediary product and since it has been used in the manufacture of an exempted final product, the benefit of exemption notification No.67/95 is not available - Held that:- Admittedly UH25 is manufactured by mixing 75% of UDMH and 25% of HH in m .....

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both UDMH and HH25 are used for the same purpose viz., as a rocket propellant or fuel.

In the absence of any evidence to show that there is a change in the character of the product and use of the product, we cannot say that Department has been able to show that a new product, as per the definition of manufacture laid down by the Hon’ble Supreme Court, has emerged. In such a situation, when by mixing UDMH and HH a new product is not emerging, it cannot be said that UDMH has been captiv .....

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27-5-2015 - Shri G. Raghuram, president And Shri B.S.V.Murthy, Technical Member For the Petitioner : Mr. K.S. RAVI SHANKAR, Sr. Advocate & Mr. N. Anand, Advocate For the Respondent : Mr. S. K. Singh, Commissioner (AR) ORDER Per : B.S.V.MURTHY In both the appeals the issue involved is common and appeal No. E/2037/2010 covers the period from June 2002 to October 2006 and appeal No. E/1483/2012 covers the period from November 2006 to August 2011. The total duty demand is about ₹ 7.44 cro .....

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sked the appellant to supply modified UDMH by simply mixing the same with bought out chemical called Hydrazine Hydrate (HH) in ratio of 75:25. The mixture of UDMH and HH was called/named as UH25. There is no dispute about the fact that UH25 as well as UDMH are used for the same purpose and there is no finding to the contrary also. There is no dispute regarding the eligibility of UH25 for the benefit of exemption under Notification No.64/95-CE dated 16.3.1995. 2.2 The dispute has arisen because t .....

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d at all in view of the fact that two show-cause notices issued for the period from January 2002 to June 2002 and October 2003 to March 2004 have already been adjudicated. These two orders were challenged and in both the cases the Tribunal decided the issue in favour of the appellant. One of the orders was carried to Supreme Court and the Civil Appeal filed by the Revenue was dismissed on 11.5.2007 as reported in 2007 (213) E.L.T. A143 (SC). Therefore the impugned order is untenable. However, it .....

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nsumption exemption Notification No.67/95 was not considered. He observed that Department is not questioning the eligibility of UDMH or UH 25 for the benefit of Notification No.64/95 at all and he agrees that this issue has been settled. We agree that it is possible to treat both the issues as different. 3.1 It was submitted by the learned Sr. Counsel that by mixing UDMH of 75% and HH of 25% and giving a new name UH25 to the extract cannot be said to have resulted in a new product. The product r .....

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ed that the appellant never claimed the benefit of Notification No.67/95-CE because they never considered that mixing UDMH and HH amounted to manufacture. Therefore department cannot raise a demand on the ground that appellant is not eligible for exemption to UDMH on the ground that it has been used captively. The Commissioner came to the conclusion that process amounts to manufacture on the basis of this observations which are contained in paragraphs 24 to 27, which are reproduced below. 24. Th .....

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manufacture in the Central Excise Act, 1944, it can be understood that the processes that involve completion of a product is called as manufacture, which is almost equal to the definitions given in the standard dictionaries as mentioned above. But, goods come out of the activity of manufacture, also become excisable goods to attract levy of central excise duty, because all goods are not under levy of excise. Conversely, all the activities that amount to manufacture under Central Excise law are n .....

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ure . (emphasis supplied). 27. In the instant case, the assessee did not contest the processes that were said to be undertaken by them at their factory, that were listed in the show cause notices and also submission made by them in their replies, but objected that those processes do not amount to manufacture. It is observed from various activities/process of the assessee, to mix the UDMH along with HH in the required proportions/ratio in a mixing container and then thoroughly stirred for suffici .....

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iable to duty. 4. Admittedly UH25 is manufactured by mixing 75% of UDMH and 25% of HH in mixing container and thereafter thoroughly stirred for 90 minutes to meet the required density and specifications. According to the decision of the Honble Supreme Court, to call a process as manufacture it should result in emergence of a new product with distinct name, character and use. In this case there is no doubt that ISRO has given a new name UH25. The question that arises is whether it has attained a .....

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