JUDGMENT

Bharucha, J.-The appellants manufacture nylon yarn using a raw material known as caprolactam. The raw material is subjected to polymerisation. This is a reversible process. After polymerisation the resultant poly-caprolactam is spun to obtain nylon yarn. Waste in solid form containing poly-caprolactam is obtained at various stages of the process of manufacture. To fully use caprolactam, which is expensive and duty paid, the appellants have installed equipment by which caprolactam is recovered from the aforementioned waste and re-cycled into the process. The Excise authorities sought to treat the process of separation of caprolactam from the waste as an independent manufacturing process, and subjected it to duty. The claim of the appellants for refund of such duty was rejected. The Collector (Appeals) upheld the rejection, as did the Customs, Excise & Gold (Control) Appellate Tribunal. Hence this appeal.

2. Caprolactam in flakes is used as the original raw material. The caprolactam that is recovered from the waste as aforestated is in molten form and, according to the appellants, not a saleable commodity. The Tribunal in the principal judgment (in C.A. No. 4173-74 of 1984) ca