- (1.) In this appeal preferred by the Collector, central Excise, Bombay under Section 35-E of the central Excises and Salt Act, 1944 (hereinafter referred to as "the. Act") , the question is whether the distillation and re-crystallization carried out by the respondent amounts to 'manufacture' The respondents, M/s S. D. Fine Chemicals Pvt. Ltd. , are engaged in the manufacturing of laboratory chemicals and fine chemicals. They also under lake repacking and purification of laboratory and fine chemicals. In the classificationlist filed by them on 1/4/1983, they claimed that the process of purification and distillation undertaken by them does not amount to process of manufacture and accordingly, claimed exemption from duty in respect of such goods under Notification No. 77 of 1983 dated 1/3/1983. The Assistant Collector agreed with the respondents but his order was revised by the Collector (Appeals) who held that the processes undertaken by the respondents do amount to manufacture. Inasmuch as a new commodity known to the market emerges as a result of such processes, he held, they are liable to excise duty. The respondents filed an appeal before the Customs, Excise and Gold (Control) Appellate tribunal, New Delhi which was heard in the first instance by a bench of two Members. The Member (Technical) agreed with the respondents. He held that the process undertaken by the respondents is merely for improving the equality or purity of the chemicals and does not amount to manufacture. He observed that even after purification, the chemicals are known by the very same name and that there was no change in the chemical formula even after purification. The simple process of distillation and re-crystallization of the chemicals does not amount to manufacture for the purposes of the Act, he held. The Member (Judicial) however, took a contrary view. He was of the opinion that the process undertaken by the respondents is not a simple process and that the said process "brings in a transformation which will change the name, character and use". The Member (Judicial) further observed, "the ordinary chemicals cannot be used in laboratory without it undergoing purification. They are traded in different commercial names and has altogether different use. So long as the trade recognises it as a different commodity and its uses are different, the item has to be recognised as a different goods and became excisable goods". In view of the difference of opinion between the two Members, the matter was referred to a third Member. The third Member held in favour of the respondents-manufacturer on the following reasoning' "As can be gathered, the key test is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity. In my view in the instant case this test has not been satisfied as the chemical prior to the two processes concerned herein continues to remain the same after being subjected to the processes, admittedly with only a change in increase in purity. The commodity retains its identity substantially through the processing stage. Therefore, it cannot be said to have been manufactured. "
(2.) It would be evident from the opinion of the third Member that he did not deal with the several aspects dealt with in the opinions of the two differing Members. He did not also indicate whether he agrees or disagrees with the findings recorded by the Member (Judicial) , viz. , that after the processes undertaken by the respondents, the chemical bears a different chemical name and have an altogether different use. The third Member did not also deal with the holding of the Member (Judicial) that after the processes undertaken by the respondents, the chemical became a different commercial commodity.
(3.) The expression 'manufacture' is defined in clause (f) of Section 2 of the Act. The definition, as substituted by Finance Act (No. 25 of 1975, will) effect from 1/3/1975 (sic by Act 5 of 1985 w. e. f. 28/2/1986 reads thus: " 'Manufacture' includes any process,- (I) incidental or ancillary to the completion of a manufactured product: (Ii) which is specified in relation to any goods in the section or Ch. Notes of the Schedule to the central Excise Tariff Act, 1985 as amounting to manufacture, And the word 'manufacturer' shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;";