TMI Blog1995 (12) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of commercial motor vehicles and the Petitioner No. 2 is a shareholder and a citizen of India. The Respondent Nos. 2 and 3 are officers of the Respondent No.1, carrying out duties and performing functions under the provisions of the Central Excises and Salt Act, 1944 (hereinafter referred to as the said Act) read with Central Excise Tariff Act, 1985 (hereinafter referred to as the `Tariff Act') and the Central Excise Rules, 1944 (hereinafter referred to as the said Rules). (b) The Petitioner No. 1 Company has a factory at Pimpri where they manufacture commercial motor vehicles. As a part of the programme of expansion, the Petitioner No. 1 decided to construct a new shed known as `J' Block in their premises at Pimpri and they awarded the work of construction of new shed to an independent construction contractor viz. M/s. Shapoorji Pallonji and Co. Pvt. Ltd. The Petitioner No. 1 Company decided to use the said `J' Block,when completed, to manufacture their new vehicle `Tatamobile'. The said construction commenced in or about October 1985 and at the time of filing of the Petition, the same was still in progress. (c) It is the Petitioners' contention in the Petition tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 31st January 1988 addressed to the Respondent No. 3, the Petitioner No. 1 inter alia pointed out that the items manufactured and cleared to `J' Block so far, already stood covered in their classification lists and the items had been cleared on the gate passes at the appropriate rate of duty as applicable to the subject items referred. Though inspection of the items enlisted in the letter dated 1st December 1987 of the Respondent No. 3 was offered and classification list of all the items was given, in reply to item Nos. 7 and 9 of the said letter dated 1st December 1987, the Petitioners categorically stated that the said items were part of factory building and did not attract excise duty. The Respondent No. 3 again by his letter dated 1st February 1988 addressed to the Petitioner No. 1, in continuation of his letter dated 1st December 1987, called upon the Petitioner No. 1 to file classification list for the items manufactured by them and indicated that the classification list should reflect the items already mentioned in the earlier letter and also iron and steel structures like Trusses, Purlins, Girders, Columns, Angles, Channels, Beams, Plates, Racks, Tables, Work Tables, etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be the subject matter of excise duty. The said letter in detail dealt with other items in respect of which classification lists were called upon and with which items we are not concerned in the present writ petition as the present Petition revolves around only four items as indicated above. On 19th February 1988, the Respondent No. 3 addressed a letter to the Petitioner No. 1 Company enclosing therewith a copy of the Trade Notice No. 15 of 1988 dated 8th February 1988 and in view of the Trade Notice, the Respondent No. 3 directed the Petitioner No. 1 Company to take necessary action to pay duty on the items mentioned in the Trade Notice and manufactured by the Petitioner No. 1 Company at their `J' Block. The copy of the Trade Notice which is annexed to the Petition as Exh. `G' inter alia mentioned that a doubt had been raised whether duty paid Sheets, Angles, Channels, Beams, Plates, etc., being subjected to various processes for preparing `columns' and `trusses' which went into the erection of shed or erected structures would be leviable to duty and that it had been considered that these items after being subjected to various processes would fall under chapter sub-hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner No. 1 Company's officers to expedite the matter of compiling details as required by the Department. The Respondent No. 2 again by his letter of the same date, after again referring to the failure on the part of the Petitioner No. 1 Company to supply the information, inter alia stated that the contention of the Petitioner No. 1 Company that the activity of manufacturing of structures, parts of structures, pillars, doors, etc., could not be subjected to excise duty when they were fabricated in the integral process of constructing a building and building of an immovable structure like a factory was `incorrect' and therefore the Petitioners were called upon to furnish the information so as to ascertain the `quantum of duty payable' by the Petitioner No. 1 Company on such `manufacturing activity' and for recovery of the same. In the last para of the said letter, it was in categorical terms mentioned that if the Petitioner No. 1 failed to furnish the information within a week's time, the Respondent No. 2 would have to take recourse to legal action as contemplated under the said Rules. Although necessary information was supplied by the Petitioners as per their letter dated 23rd March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondents that the Petitioners have rushed to Court after the said Notice dated 22nd March 1988 and that although the Petition has been admitted, the same could be and should be still rejected on the ground of Petitioners not availing of the alternate remedy. It was further submitted that when the present Petition was admitted, the Respondents were permitted to proceed further in the matter of issuance of Notices of Demand and hence several Notices of Demand have been issued and in fact, in respect of the amount demanded as per the interim order passed by this Court, bank guarantees have been given. It was thus the submission on behalf of the Respondent that the present matter involved determination of the question as to whether these four items are goods or not and the same could be done only by the fact finding body viz. the adjudicating authority. 5.In order to appreciate the above submissions, it would be advantageous to refer to certain provisions of the Act. Section 3 of the said Act is the charging section and the same provides inter alia that there shall be a levy and collection of duty of excise on all excisable goods other than salt which are produced or manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can be taken as settled law that a manufactured product in order to attract excise duty must be marketable and the fact that it is in fact not marketed would not make any difference. Thus, the Supreme Court in the case of Ujagar Prints v. Union of India and others, reported in 1988 (38) E.L.T. 535 (S.C.) inter alia laid down :- "There is in law no 'manufacture' unless as a result of the process a new and commercially distinct product with distinct use emerges." The Supreme Court, again in the case of Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad, reported in 1995 (76) E.L.T. 241 (S.C.) inter alia laid down that the duty of excise being on production and manufacture which means bringing out a new commodity, it is implicit that such goods must be usable, movable, saleable and marketable. From the several authorities cited by both the sides, the further three facets also emerge as settled law. They are that :- (1) items manufactured for `captive consumption' and not meant to be marketed although marketable would attract excise duty; (2) items coming into existence as `intermediary' or 'transient' articles if marketable although not marketed would also attract ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... captive consumption or marketability being made applicable. In support of their above submissions, the Petitioners relied on the definitions of these words from the Webster's Third New International Dictionary. As far as the item `Column' is concerned, it is inter alia defined at page 451 as "a supporting pillar . . . . one of a building's vertical supporting members made of steel, cast iron, reinforced concrete, timber or stone and often extending from the foundation through several floors, which it supports to the roof." Coming to the definition of `Girder' it is inter alia defined therein at page 949 as "a horizontal main member supporting vertical concentrated loads (as from beams) b: Beam; esp. an iron or steel beam either made in a single piece or built up typically of plates, flitches, lattice-work or bars and often of very large proportions; . . . . 2. a rolled metal unit of `I' section or other section or a built up unit of rolled members and plate that may be transverse or longitudinal depending on the structure to be supported." The word `Truss' is inter alia defined therein at page 2456 as "a bracket - an assemblage of members (as beams, bars, rods) typically arranged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required tests. The Supreme Court inter alia referred to its earlier decision in the matter of Delhi Cloth and General Mills Co. Ltd. (supra) wherein it was laid down that the twin test of exigibility of an article to duty under Excise Act are that it must be goods mentioned either in the Schedule or under Item 68 and must be marketable. The Supreme Court in the case of Delhi Cloth and General Mills Co. Ltd. (supra) had further held that the word `goods' applies to those goods which can be brought to market for being bought and sold, and therefore, it implied that it applies to such goods which were movable. The Supreme Court in the case of Quality Steel Tubes (supra) also relied on its earlier decision in the case of Union Carbide India Ltd. v Union of India and others, reported in (1986) 2 S.C.C. 547 wherein it was held that even if the goods were capable of being brought to the market it still had to satisfy the test of marketability and therefore the basic test for levying duty under the Act was that an article must be goods and secondly, that it should be marketable and capable of being brought to the market and goods which were attached to the earth and thus, became immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s expected, dispute the principles on which excise duty can be levied as laid down by the various decisions of the Supreme Court referred to above. However, he submitted that the four items in question were goods inasmuch as that after the process of fabrication, the same came into existence. The fact that they were not marketed was irrelevant and that these items were, in any view of the matter, intermediary/transient products and they were marketable and they satisfied the twin tests laid down by the Supreme Court in the matter of Delhi Cloth and General Mills Co. Ltd. (supra). Shri Dada referred to several decisions of the Supreme Court on this aspect to the effect that transient products also could be subjected to payment of excise duty. We do not think it necessary to refer to the said decisions as the submission per se cannot be disputed. However, the questions still remain whether the process of drilling, welding and fastening after cutting the duty paid material purchased from the market amount to manufacturing and whether any new 'goods' came into existence. Shri Dada referred to the Central Excise Tariff of India for the years 1987-88 and 1988-89. It is apparent from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. 10.In our opinion, the position is well settled as a result of several judicial pronouncements of the Apex Court and the High Courts. `Manufacture' implies change but every change is not a manufacture. There must be a transformation. A product, with a distinct use, character and name necessarily must come into existence. Every product, in order to become exigible to excise duty, must be known as such in the commercial community. In the instant case, it is admitted that on the materials like angles, plates, etc. which are used, excise duty is already paid. They are subjected to cutting to size, drilling holes for fastening the materials with nuts and bolts. There is no manufacture in the strict sense. In our view, the cutting of the steel plates, drilling of holes, rivetting or fastening them are merely operations from which one could not hold that the identity of the original product was lost and a transformation had taken place. The Columns, Beams, Trusses and Purlins are sections or portions of a structure, come into existence when affixed or fabricated into the structure, thus, simultaneously on coming into existence, become part of the structure and thus becoming immova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Petitioners, reliance was placed on the decision of the Supreme Court in the matter of L. Hirday Narain v. Income Tax Officer, Bareilly, reported in A.I.R. 1971 S.C. 33 wherein it was inter alia held that the High Court, after entertaining the Petition and giving the hearing to the Petitioners on merits, cannot reject the Petition on the ground that the statutory remedy was not availed of. Further, reliance was placed by the Petitioners on the decision of this Court in the matter of Tata Engineering and Locomotive Company Ltd. v. Union of India, reported in 1991 (52) E.L.T. 500 (Bom.) wherein this Court entertained the Writ Petition at the show-cause notice stage itself and rejected the contention raised by the Department to the effect that the Department should be permitted to continue with the proceedings and the High Court should not examine the validity of the show-cause notice and held that if the show-cause notice was issued without any jurisdiction or the show-cause notice cannot be sustained by reference to any of the provisions of law, then the High Court was entitled to strike down the show-cause notice and it was not necessary to compel the assessee to undergo a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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