1. The appellants were denied the benefit of exemption Notification No.83/83-Central Excises, dated 1-3-83 during the year 1983-84 on the ground that the total value of their clearances of all excisable goods in the preceding financial year had exceeded the stipulated ceiling limit of Rs. 25 lakhs. The appellants contest this finding.
2. During the hearing before us, the appellants stated that break-up of their relevant clearances was as under :Plywood for teachests 1,15,703.91 9,73,162.30Teachests "Battens" 2,08,566 Sets 5,14,015.78Sawn Timber 50,486 Cft.
11,18,177.78Fuel wood and saw dust 39,953.57 ___________________ They argued that the item 'sawn timber' had been held to be non-excisable by the Tribunal in their order reported at 1984 (16) E.L.T. 317 (Tribunal)-Sanghvi Enterprises v. Collector of Central Excise, Chandigarh, "On careful consideration of the matter we agree with the appellants that sawn timber is not a different article from log wood as both are timbers or wood only. Just by cutting or sawing a timber log into smaller pieces, it cannot be said that a new and different article having a distinct name, character and use has been brought into existence. We, therefore, hold that no manufacture or production can be said to have taken place in relation to sawn timber and hence the appellants were not liable to pay any duty in respect of sawn timber." The appellants stated that they manufactured only rough sawn planks and did no further finishing operation to convert them into identifiable articles of wood. They maintained that if value of clearances of sawn timber was excluded, the total value of their clearances would come to less than Rs. 25 lakhs and they would be entitled to the exemption.
This was the only plea they pressed for before us.
3. The Department's Representative stated that in the same order of the Tribunal relating to Messrs Sanghvi Enterprises, it had been held that saw dust which arose as a residue or by-product in the process of sawing, was a new and different excisable product falling under Item 68 of the Tariff. It was his contention that a residue or by-product in the nature of a new excisable product could arise only in the course of manufacture of a new main commodity. Such main product in this case was sawn timber. If the saw dust arising in the course of sawing was a new product, so should be sawn timber and it too fell under item 68 only.
He requested this Bench to reconsider the earlier Tribunal order in the case of M/s Sanghvi Enterprises and hold that sawn timber was a new and different product from timber logs, that its value was to be included in the total turnover ceiling and that, therefore, the appellants were not entitled to the exemption asked for by them.
4. We have carefully considered the matter. We find no authority-technical or judicial-for the proposition made by the Department's Representative that if a process results in a residue/by-product which is a new article, the main product of the process must necessarily be a new product also. His contention can easily be repelled by the example of raw vegetable oil and treated vegetable oil-the goods which were the subject-matter of the. by now famous Supreme Court judgment in the D.C.M. case 1977 E.L.T. (J 199).
In that case the assessee purchased raw oil from the market, applied to it the process of neutralisation by alkali and bleaching by activated earth and/or carbon, prior to its hydrogenation into vanaspati. The Department contended in that case that "manufacture" was complete since by the application of one or more processes the raw material underwent some change. The Supreme Court rejected this contention saying that this would equate "process" to "manufacture" and for this the Court could find no warrant in law. The Supreme Court quoted with approval the following passage from an American judgment : "Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation ; a new and different article must emerge having a distinctive name, character or use." And yet it is well-known that the aforesaid treatment of raw vegetable oils results in a residue and a by-product, namely, soap stock and glycerine which are new products. But for that reason, the treated vegetable oil itself did not become a new commodity. The Supreme Court clearly ruled that what M/s. D.C.M. undertook was only processing of raw oil and not manufacture of a new commodity, prior to hydrogenation.
5. We find no ground to interfere with the earlier finding of this Bench that sawn timber (without any further finishing into distinct articles) is not a new or different commodity. Sawing only reduces the thickness and/or length and width of the timber pieces. But just after sawing, it remains timber only. We agree with the appellant that sawn timber was, for that reason, not an excisable item and the value of its clearances could not, therefore, be included in the turnover ceiling.
6. In the light of our above discussion, we allow this appeal in terms that if by excluding the value of clearances of sawn timber, the appellants became entitled to the exemption, the benefit thereof should be given to them.