1970 (8) TMI 31 - SC - Central Excise

Imposition of excise duty on circles of kansi and brass prepared in the process of manufacturing utensils challenged Held that - In the case before us circles in any form are envisaged as the completed product produced by manufacture which are subjected to excise duty. The process of conversion of billets into circles was described by the legislature itself as manufacture of circles. It cannot be contended that the whole of this process cannot be described as manufacture of circles. In this process of manufacture of circles there are two stages. At the first stage billets are produced and at the second stage circles. In any case it has to be held that the circles thus prepared are the result of this process of manufacture. The end-result of this process of manufacture is the production of circles in some form which is envisaged as the goods to be subjected to excise duty. The excise duty was therefore correctly levied by the appellant. Appeal allowed.

Summary

Issues:
Challenge to imposition of excise duty on circles of kansi and brass prepared in the process of manufacturing utensils.

Analysis:
The appeal arises from a suit challenging the imposition of excise duty on circles of kansi and brass prepared in the manufacturing process of utensils. The respondents, engaged in manufacturing kansi and brass utensils, procure copper, tin, and zinc to create alloys of copper and tin (kansi) and copper and zinc (brass). The appellant imposed excise duty at the stage when rolling mills prepared circles from the billets under Item 26-A of the Central Excises and Salt Act. The dispute centered around whether the uncut circles formed at this stage were liable for excise duty under the Act.

The appellant contended that the uncut circles produced by the rolling mills constituted circles in some form and size, thus falling under the purview of Item 26A-(2) for excise duty. The courts held that the uncut circles were indeed circles and, therefore, subject to excise duty. The High Court's decision was challenged based on the interpretation of the Act and the definition of circles under Item 26-A.

In analyzing previous court decisions, it was noted that the cases cited by the respondents did not support their contention. The Court emphasized that the uncut circles formed after rolling billets were indeed circles, meeting the criteria for excise duty under Item 26-A. The argument that no new substance was brought into existence during the process of converting billets into circles was refuted, as the legislature had explicitly included both billets and circles for excise duty.

The Court further emphasized that the process of manufacturing utensils started with raw materials and progressed through creating alloys, billets, and finally circles. The entire process was deemed as the manufacture of circles, with the end result being the production of circles subject to excise duty. Therefore, the imposition of excise duty on the circles prepared by the respondents was deemed valid, leading to the dismissal of the respondents' suit.

In conclusion, the appeal succeeded, and the suit of the respondents challenging the excise duty on circles of kansi and brass was dismissed.