K.S. Venkataramani, Member (T)

1. This appeal is directed against the order, dated 13-11-1986 passed by the Collector of Central Excise (Appeals), Bombay by which he had upheld the order, dated 31-1-1984 passed by the Assistant Collector of Central Excise, Divn. III, Kalyan rejecting as inadmissible claims for refund filed by the appellants, herein, totally amounting to Rs. 2,82,354.33 holding that the goods manufactured by the appellants were excisable under T.I. 68 CET as goods not elsewhere specified in the Tariff. Facts in brief are that the appellants had filed the refund claims on their products, Natrin, Nodin and Bactin during the period March, 1983 to December, 1984 on the ground that the products do not fall under any Tariff Item of the Central Excise because the product cannot be considered as manufactured within the meaning of Section 2(f) of the Central Excises & Salt Act, 1944. They, further, explained in the refund claim that Bio-inoculants, such as, Natrin, Nodin, Bactin and mixed varieties are nothing but living micro-organisms present in the soil which the appellants isolated and multiplied under suitable condition and than mixed it with lignite-based carrier for clearance to consumers and hence it was their claim that no manufacturing process was involved and the resultant goods were not excisable. The Assistant Collector rejected the claims on the reasoning that the process of separation of micro-organism from the soil, multiplication thereof and mixing the same with lignite-based carriers is carried on with power and the process satisfies the definition of manufacture as per Section 2(f) of the Central Excises & Salt Act, 1944. This order was upheld by the Collector (Appeals) resulting in the present appeal.

2. The Ld. Counsel, Sh. N.A. Dalvi, Ld. Counsel alongwith Sh. Arun Jaswantlal, Ld. Counsel appeared for the appellants and submitted that the products, in question, are micro-organisms suitable for purposes of enriching the soil which are obtained by a process of isolating useful microbes generally from soil, cultured under controlled conditions where they grow whereafter they are mixed with lignite-based carrier, packed and cleared to the consumers, and it was urged that there is no manufacture involved in such a situation. It was contended that manufacture implies emergence of a new product as a result of the raw-material undergoing a change and there is no such process in their case since multiplication of micro-organism undertaken by them is a natural process. They relied upon the Bombay High Court decision in the case of Commissioner of Sales Tax v. Nhava Poultry Farm - 1985 (58) STC 102 holding that the activity of feeding one day old chicks and rearing them to desirable maturity of consumable table birds in poultry farm, and with a view to obtain eggs does not amount to manufacture. The ratio of the decision, according to the appellants, is applicable for Central Excise purposes also as it is with reference to the meaning of 'manufacture' in the general sense because as a result of multiplication of micro-organisms no new product emerges and hence no manufacture is involved. The following decisions of the Supreme Court on the above lines to say that manufacture requires the emergence of a new product were also cited :

(i) Deputy Commissioner (Sales Tax) v. PIO Food Packers -MANU/SC/0400/1980 : 1980 (6) ELT 343.

(ii) Sterling Food v. State of Karnataka -MANU/SC/0423/1986 : 1986 (26) ELT 3.

(iii) Dy. Commissioner (Sales Tax) v. Shiphy International -MANU/SC/0123/1988 : 1988 (34) ELT 416.

It was, further, contended that the Collector (Appeals), while observing that the products made by the appellants are akin to yeast which is classifiable under Item 68 CET has not disclosed the authority on which it is based.

3. Shri Narasimhamurthy, Ld. D.R. for the Revenue, contended that there is a process of manufacture involved in which the starting material is the soil from which, by a manipulative proces