K.S. Venkataramani, Member (T)

1. This is an appeal directed against the order dated 4-3-1987 passed by the Collector, Central Excise (Appeals) Bombay by which the Collector had allowed review application made by the Collector of Central Excise, Bombay-II before him under Section 35E(4) of the Central Excises Salt Act and had set aside the order of the Assistant Collector of Central Excise Division IX of the Bombay-II Collectorate dated 30-3-1984. The brief facts are the Appellants herein manufactured Chemical laboratory and fine chemical. They are also engaged in the activity and of repacking and purification of laboratory and fine chemicals. The purification is carried out by them by process of recrystallisation and distillation. In their classification list from 1-4-1983 they had shown that such process of purification and distillation were not process of manufacture and they claimed exemption for such goods under Notification 77/83 dated 1-3-1983 as the value of all excisable goods cleared by them during the period 1982-83 amounted to Rs. 22,24,272/- excluding value of packed and purified goods which was Rs. 2.11 crores. A show cause notice was issued on 23-7-1983 by the Assistant Collector, in which it was alleged that the products repacked and purified are of high quality chemicals subjected to process like recrystallisation grinding etc. to achieve purity and that therefore this refined chemicals are much purer as compared to those of technical or commercial grade. It was further noted in the show cause notice that these products are for selected and specialised uses such as analytical testing in laboratories etc. Therefore the processes were held to be processes for manufacture and the goods excisable goods after the value of their clearance were to be added to the value of excisable goods already declared by Applicants in their classification list the total value exceeded Rs. 40.00 lakhs during 1982-83, and because of this, in terms of the Notification 77/83 the Applicants were alleged to be ineligible for the exemption as claimed by them in classification list for the period 1983-84.

2. On considering their submissions the Assistant Collector, by his order dated 30-3-1984 dropped the proceedings holding that the process of purification/refinement of chemicals by distillation and recrystallisation does not amount to manufacture within the meaning of Section 2(f) of Central Excises Salt Act, 1944. In coming to this conclusion the Assistant Collector considered the opinion given by the Deputy Chief Chemist, and the Chief Chemist of the Central Revenue Laboratory, as also opinion given by the National Chemical Laboratory, Pune and relied upon the opinion of National Chemical Laboratory according to them as far as basic Chemical Industry is concerned the term manufacture implies conversion of raw material into finished product by chemical reaction following chemical changes by use of energy and labour. From this it was concluded by the Assistant Collector that process of distillation and recrystallisation do not amount to manufacture. A review application was filed before the Collector .(Appeals) under Section 35E(4) against the Assistant Collector's order above and the Collector (Appeals) allowed the application holding that the products in question have distinct identity and use as compared to raw materials used for their production and that these arc also known in the trade parlance as distinct from raw materials. The present appeal has been preferred against this order.

3. Sh. Lakshmi Kumaran, Ld. Counsel appearing for the appellants submitted that the appellants had only undertaken purification of bought out duty paid chemicals by the process of simple distillation (not fractional) and recrystallisation and contended that such a process, as rightly held by the Assistant Collector, will not amount to a process of manufacture. Reference was made to the definition of the terms distillation and crystallisation in t