G.A. Brahma Deva, Member (J)

1. This appeal is directed against the Order-in-appeal No. 476-CE/CHG/85 dated 16-9-1985 passed by the Collector (Appeals), Central Excise, New Delhi.

2. The issue involved in this case is whether recovery of Caprolactum amounts to manufacture and such caprolactum is excisable under Tariff Item No. 14-AA.

3. The facts of the case, in brief, relating to this issue are that the appellants are engaged in the manufacture of Nylon yarn falling under Tariff Item 18 by using duty paid indigenous or Imported virgin caprolactum as the principal raw material among various raw materials. During the course of manufacture of Nylon yarn, certain wastes arise. This waste contains depolymerised caprolactum. It appeared that the wastes are reacted with the help of steam and is allowed to melt. The melt is passed through the condensation/concentration Tank and fed in the water wash Tanks. The wash water collected from polymerisation/De-polymerisation is distilled and passed through the vessel for monomer and monomer goes back recycled with it. During this process caprolactum is recovered from the waste in vessel for Monomer and the monomer (Caprolactum) then goes back to the lactum melter along with the virgin caprolactum and is recycled with it. The contention of the appellants before the lower authorities that recovery of caprolactum from waste was not a process of manufacturing activity as no new product emerged and there is no evidence to show that recovered caprolactum as such was either marketed or marketable, among other contentions. These contentions were negatived by the Assistant Collector who adjudicated the proceedings and held that process involved amounts to manufacture and recovered caprolactum is liable to excise duty under Tariff Item No. 14-AA. In appeal, Collector (Appeals), dismissed the appeal following the ratio of the decision of this Tribunal in the case of Collector of Central Excise v. Nirlon Synthetic Fibres & Chemicals Ltd., Bombay, reported in MANU/CE/0250/1983 : 1983 (14) ELT 2418 (Tribunal).

4. Shri Vinod Agarwal, learned advocate, appearing for the appellants submitted that ratio of the decision in the above case is no longer applicable to the facts of this case in view of the fact that much law has developed since the date of passing that order. He said that similar view taken by this Tribunal in the case of Bhor Industries Limited, Bombay v. Collector of Central Excise, Bombay, reported in MANU/CE/0075/1984 : 1984 (17) ELT 559 (Tribunal), has been reversed by the Supreme Court in the very case of Bhor Industries Limited v. Collector of Central Excise, reported in MANU/SC/0073/1989 : 1989 (40) ELT 280, wherein it was held that marketability is an essential ingredient in order to be dutiable under the Schedule to Central Excise Tariff Act, 1985. The recovered caprolactum from waste as such could not be sold and the burden lies on the Department to prove that it was marketable or marketed. But there is no evidence to show that commodity as such was marketed or marketable.

5. The sum and substance of the arguments of Shri Narasimha Murthy, learned J.D.R. for the revenue, is that in view of the development in technology, this product is well known by name in the commercial field and in view of the fact that it was captively consumed, irrespective of the fact whether it was marketed or not, is subject to duty as it finds a place in the Tariff Entry.

6. We gave our anxious consideration to the arguments advanced on both sides and perused the records. It is evident from the record that both the authorities below have proceeded to determine the excisability of the product based on process of manufacturing activity, without considering the important point about marketability of the product in determining the goods for the purpose of levy of excise duty. The material which is sufficient for the purpose of holding that there is manufacturing activity and emergence of a separate product are not s