ORDER

G.A. Brahma Deva, Member (J)

1. This appeal is filed by the revenue against the Order-in-Appeal No. M/753/AHD/368/86 dated 24-7-1986 passed by the Collector of Central Excise (Appeals), Bombay.

2. Facts of the case, in brief, are that the respondents M/s. Maize Products Limited have received duty paid rejected goods from their customers as under :

(a) 404 bags of 'White Dextrine' originally cleared on payment of duty under G.P.I. Nos. 1134 and 1135 dt. 8-8-1981.

(b) 12 bags of 'White Dextrine' originally cleared on payment of duty under G.P.I. Nos. 1184 and 1185 dt. 13-8-1981.

(c) 20 bags of 'Mapropharm Starch' cleared on payment of duty under G.P.I. No. 2957 dt. 19-3-1982.

They, therefore, filed D-3 No. 21 dt. 12-12-1981, No. 26 dated 11-1-1982 and No. 3 dated 28-5-1982 under Rule 173-H and accounted for in Form V register. The above goods were further reprocessed as a result of which 'White Dextrine' had turned into 'Yellow Dextrine' and 'Mapropharm Starch' was rebagged after serving into 'Maize Starch Powder'. The reprocessed goods were then cleared without payment of duty as provided in Rule 173-H under cover of G.P.I. No. 454 dated 29-5-1982, No. 576 dated 14-7-1982, No. 539 dated 8-6-1982 and No. 570 dated 12-6-1982. These facts were also reported by them in their R.T. 12 returns. According to the Department the reprocessed goods cleared without payment of duty were not the same goods which were received under D-3 in respect of duty paid rejected goods brought in the factory and on these grounds the duty on the reprocessed goods was demanded by issuing three Show Cause Notices. These Show Cause Notices were duly answered by the respondents contending that the goods cleared without payment of duty were the same goods which were received by them for reprocessing and that the processes applied on the rejected goods did not amount to manufacture of any new goods and also that the resultant reprocessed goods were covered by the same Tariff Item in which the rejected duty paid goods had discharged their duty liability at the time of their original clearance from the factory. It was also contended by them that Show Cause Notices were not sustainable as they did not disclose any reasons why the reprocessed goods were not considered as the same- duty paid rejected goods and extended period of 5 years under Section 11A was not applicable. These contentions were negatived by the Assistant Collector who confirmed the demand. In appeal, the Collector of Central Excise (Appeals), Bombay, following the ratio of the decision of the Tribunal in the case of Collector of Central Excise, Bhubaneswar v. Orissa Cement Co. Ltd. [MANU/CK/0004/1984 : 1984 (17) ELT 161 (Tribunal)], allowed the appeal accepting the contention that the reprocessed goods were for all purposes the same goods which were received back in their factory. Further he did not agree with the Assistant Collector that period of 5 years was applicable under Section 11A and accordingly, he set aside the order of the Assistant Collector. Aggrieved by this order, the Department has come before us by way of this appeal.

3. We have heard Shri L. Narasimha Murthy, learned JDR for the appellant and Shri N.I. Mehta, learned Advocate for the respondents.

4. It was contended by Shri Narasimha Murthy, learned JDR for the revenue, that reprocessed goods cleared without payment of duty are not the same goods which were received and new goods came into existence by process of manufacture and in view of the fact that new product emerged out of process of manufacture in different name, form and for different uses. It cannot be considered as the same goods under Rule 173-H of Central Excise Rules, 1944. He stated that the goods had been cleared in different name and this fact was not disclosed to the department which amounts to concealment of fact and extended period of 5 years under Section 11A was justified. Further, he said that ratio of the decision in the case of Orissa Cement Co. Ltd., is not applicable to the facts of this case as the issue involved in that case was in relation to provisions of Rule 173-L as against 173H of the Central Excise Rules in the present case.

5. Shri N.I. Mehta, learned Advocate, appearing for the respondents, while countering the arguments submitted that the reprocessed goods were having same characteristic of the goods originally received back. He emphasised that the onus is on the Department to prove that the reprocessed goods were altogether different from the goods cleared at the original instance. The order passed by the Assistant Collector suffers from lack of investigation and charge is based on no evidence. He stated that in the absence of any evidence to show that they are different either in characteristic or in the identity of the goods and furthermore both the items are classifiable under the same Tariff Entry and the reprocessed goods cannot be subjected to duty as a separate commodity under the excise law. He contended that a mere change in the physical form, shape or substance of a commodity, would not by itself lead to conclusion that the new article had been manufactured. He said that this issue is well covered by the series of the decisions of this Tribunal as well as by the Supreme Court relating to Rule 173-H of Central Excise Rules as well as on main issue in determining the characteristics of the new identifiable goods. In support of his contention he cited the following cases :

1. Collector of C. Excise v. Fordham Pressings (India) Pvt. Ltd. -MANU/CE/0704/1987 : 1989 (42) ELT 721 (Tribunal)

2. Frizair Corporation v. Collector of C. Ex. - MANU/CE/0680/1987 : 1989 (42) ELT 474 (Tribunal)

3. Collector of C. Ex. v. Bakul Aromatics & Chemicals Ltd. -MANU/CE/0373/1986 : 1989 (43) ELT 758 (Tribunal)

4. Collector of Central Excise v. Javant Oil Mills Pvt. Ltd. - MANU/SC/0111/1989 : 1989 (40) ELT 287 (SC)

5. M.K. Fisheries v. Collector of Customs -MANU/CC/0055/1989 : 1989 (44) ELT 322 (Tribunal)

6. Jain Industries v. Collector of Central Excise -MANU/CE/0439/1988 : 1989 (41) ELT 274 (Tribunal)

Further he urged that notwithstanding the above points, in the absence of allegation of suppression of facts the demand raised through three Show Cause Notices was not sustainable and at any rate two show cause notices dated 26-4-1983 and 12-1-1983 are clearly barred by time.

6. We have considered the arguments advanced by both sides and perused the records with citations. On going through the facts it is evident that when the rejected duty paid goods were received, they were 'White Dextrine' and 'Mapropharm Starch', but when subsequently cleared they were 'Yellow Dextrine' and 'Maize Starch Powder'. Thus, there was difference in colour in case of Dextrine and there was difference in form in case of Starch. When the goods were produced in the original stage as 'White Dextrine' and 'Mapropharm Starch', they were not found to be of standard quality and, therefore, they were returned. On return of the goods as it was not possible by any method on reprocessing to attain the standard quality of the said goods, the goods in question were obtained by application of process without changing the characteristics and propriety of returned goods. This factual position was not rebutted by the Department with any evidence. Then question remains whether it amounts to a manufacture. The Supreme Court had time and again dealt with this issue and it was held that "manufacture implies a change but every change in the raw material is not manufacture and yet every change of an article is the result of treatment, labour or manipulation. But something more is necessary and there must be such a transformation of a product (raw material) that a new and different article must emerge having a distinct name, character or use. Therefore, manufacture does not mean merely to produce some change in its substance. Therefore, it is clear that the processing cannot be equated with manufacture. Mere change in the physical form, shape or substance of a commodity would not by itself lead to the conclusion that a new article has been manufactured."

Further this view was reaffirmed by the Supreme Court in the case of Collector of Central Excise v. Jayant Oil Mills Pvt. Ltd. (supra) wherein it was held that "All processes need not be manufacture. It must be such a process which transforms an old article into 'goods' and changes its identity and use. By the process, which can be considered to be manufacture, a new identifiable goods, in the sense known in the market as such must come into being."

Following the ratio of the decision of the Apex Court we hold that Department was not justified in levying the tax on reprocessed commodity as a new identifiable goods in the present case. In the view we have taken, we are dismissing this appeal on merits without going into the limitation aspect.

7. In the result we uphold the impugned order and the appeal filed by the Revenue is hereby dismissed.