Archana Wadhwa, Member (J) - (1.)BOTH the appeals, one filed by the appellant and other by the Revenue are being disposed off by a common order as they arise out of the same impugned order passed by Commissioner (Appeals), vide which, on one hand, he has rejected the appellant's refund claim on merits and on the other hand remanded the matter to the original adjudicating authority for re -examination of the claim on the point of unjust enrichment on the ground that the goods, in respect of which refund claim was made, were being used captively in the process of textiles and there was no stage of passing on the burden of duty to the customer.
(2.)WE have heard Shri Prakash Shah, ld. Counsel for the appellant and Shri Hitesh Shah, ld. DR for the Revenue.
As per facts on record, appellants are using duty paid caustic soda for mercering of fabrics. Such use of caustic soda results in emergence of spent caustic soda lye. The same is re -cycled and caustic soda is recovered, which again is used for mercering of fabrics. The undisputed process of recovery of caustic soda from spent caustic soda lye is by giving heat to the same by process of steam and thereby removing excess water and increasing the concentration from 4.6 % approximate to around 20%. Such caustic soda recovered from spent caustic soda lye was exempt in terms of Notification No. 191/68 -Central Excise dated 9 -11 -1968 and as such, no duty was being paid on the same. The said notification was rescinded with effect from 1 -3 -1994 vide Notification No. 86/94 and thereafter the appellant started paying duty thereon. However, subsequently, on realizing that the process carried out by them does not amount to manufacture, they filed claim for refund of duty paid on the same during the period 1 -5 -1995 to 31 -8 -1995. The said refund claim stands rejected by the authorities below on the ground that recovery of caustic soda from spent caustic soda lye is a manufacturing process and inasmuch as notification exempting the same was withdrawn, duty has been correctly paid by them.

(3.)THE appellants main contention is that the process of concentration by evaporation of water cannot be held to be process of manufacture so as to make recovered caustic soda liable to duty. Mere existence of Notification No. 191/68 -Central Excise, upto a certain period and subsequent withdrawal by the same will not, by itself, confer the status of manufacture to the recovery process, if the same cannot be independently considered as manufacture. It has also been argued that they started with caustic soda and through the intermediate process of emergence of spent caustic soda lye, recovered caustic soda only. As such, the starting material and the final material being the same i.e. caustic soda, it cannot be said that any manufacture resulting in emergence of new product has taken place. It is their contention that caustic soda recovered from the lye is already duty paid caustic soda received by them initially. For the above proposition, reliance has been placed upon various decisions of the judicial as also quasi judicial authorities.