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TMI Blog1987 (7) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... va, Consultant for the appellants and Shri G.V. Naik for the Department. 3. It would be better, for a proper appreciation of the issues involved, to give a resume of the chronology of events. On 22-5-1982 the appellants had written to the Assistant Collector claiming, that their product was not excisable since no manufacture as defined in Section2(f) of the Central Excises and Salt Act was involved. The Assistant Collector issued notice dated 20-9-1982 as to why the said claim should not be rejected. On 16-10-1982 the appellants replied reiterating their contention regarding non-excisability and further contended that even if excisable the same would be exempt from payment of duty in terms of Notification No. 104/82, dated 18-2-1982 as the product would be a handicraft. On 3-11-1982 the Assistant Collector passed an order rejecting both contentions. He held that the cut and polished granite slabs were manufactured products and were not handicrafts. 4. It appears that no appeal had been preferred against this order, On 19-4-1983 the appellants had filed a classification list mentioning the article to be under Tariff Item 68 CET but claiming benefit of exemption Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised classification list filed by the appellants on 16-5-1984. In this notice it was mentioned that reliance on the orders of the Collector (Appeals) was not correct. The Assistant Collector discussed in the said notice the process of manufacture and observed that the granite slabs were not manufactured by manual skill but by use of large and sophisticated power driven machinery and would not therefore be handicrafts. Under the said notice duty was demanded for the period November, 1983 to May, 1984. The appellants replied by letter dated 26-10-1984 reiterating their earlier contentions and relying upon a judgment of this Tribunal as supporting their contention regarding non-excisability. They claimed that the notice, ignoring the order of the Collector (Appeals), was contempt of the said order. The reaction of the Department was issue of another notice dated 23-11-1984 by the Assistant Collector under which duty was demanded for the period June, 1984 to October, 1984. The reply thereto was by letter dated 7-12-1984. From this letter it transpires that though a nearing had been fixed, on 20-11-1984 with reference to the notice, dated 4-9-1984 the appellants had not attended the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid orders were therefore not relevant to the goods mentioned in the classification list. The notice alleged that the appellants were guilty of suppression of facts. The total duty demanded was Rs. 16,15,805.40 P., the said duty being demanded on the slabs as well as scrap removed between November, 1983 and March, 1986. 9. It appears from the paper book filed by the appellants that with reference to the classification list filed by them on 3-3-1986 in respect of the above said two goods the Assistant Collector had passed an order dated 26-6-1986 under which he rejected the claim of the appellants for exemption under Notification No. 76/86 and further held that the orders of the Collector (Appeals) dated 29-10-1983 and 19-5-1984 were both inoperative. 10. With reference to the notice dated 19-6-1986 the appellants sent a reply dated 10-10-1986 denying the charge of suppression and reiterating the contention that the goods were exempt from duty. It was also claimed that as there had been no appeal against the order of the Collector (Appeals) the show cause notice was bad. It was also pointed out that though the Assistant Collector had issued the show cause notices mentioned earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants that the blocks of granite are cut into slabs of uniform size by gang saws operated by power driven machinery. These gang saws appear to be a series of toothed saw blades mounted on a frame and operated by power driven machinery. The blades are located at fixed intervals so that on the operation of the gang saw the block placed beneath the same is sawn into slabs of the required thickness. These slabs are then removed and edge trimming is done. Thereafter one side is polished, polishing being done by power operated spindles fixed with abrasive material and also by use of chemical abrasives. The case for the appellants, as seen from the note filed by them during the personal hearing on 20-2-1986, appears to be that, during this operation of sawing, manual skill of high order is required in order to position the block properly on the trolley and that again during polishing manual skill of a high order is required in order to see that the polishing does not go against the grain and damage the stone. It is, therefore, their contention that though sophisticated power driven machinery is involved in the process of manufacture of slabs it is the manual skill that is essential in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all. When the same was rejected under order dated 3-11-1982 of the Assistant Collector they did not file any appeal against the same. When subsequently they filed a fresh classification list on 19-4-1983 they did not dispute excisability but claimed exemption only. No doubt in their reply dated 26-10-1984 (to the show cause notice dated 4-9-1984) they had again raised the question of excisability, relying on a decision of this Tribunal. The said decision was in the case of Fine Marble & Minerals (P) Ltd. (Makrana) [1985 (22) E.L.T. 128]. That case dealt with mere sawing of marble blocks to convert them into slabs. No question of polishing etc. was involved. It was in those circumstances that the Tribunal had held that mere sawing of the block into slabs would not constitute manufacture calling for payment of excise duty. In the present case the granite blocks are not merely sawn but the cut slabs are then polished (requiring much of expertise according to the appellants) such polishing alone converting the cut slab into a distinct marketable product. Therefore, the question of excisability of these cut and polished slabs does not appear to present any difficulty. We may note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . For the purpose of the operations, mentioned in the previous operations, blades are to be positioned and adjusted according to the sizes of the blocks. The positioning is also done manually. (iv) ...... After the sawing operation is over, the trolley is pulled out of the machine manually. Blocks still remain on the trolly, but in a semi-processed form. From this semi-processed form of blocks slabs are separated manually by skilled artisans who use only chisels and hammers and who ensure that the original grain structure is not disturbed. In the roughening machines slabs are placed manually for levelling the surface. (v) ...... Polishing is done by using the hand polishing machines. For rotation the machine spindle, power is used. Silicon carbide bricks are fixed to the spindle. The spindle is moved manually by skilled polishers to different parts of the slabs. To the spindle manual pressure is required to be applied, and for polishing the same slab different pressures are to be applied. Thus the job of polishing is performed mainly by using the manual labour and manual skill. (vi) ...... The sides or edges of the aforementioned polished slabs are smoothened by employing skille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercises a handicraft; one employed in manual occupation. The best wit of any handicraft man is Athens SHAKS." The new Webster's Dictionary of the English language contains the following entry (Page 437) : "Hand.icraft, han'de.ikraft", han'de.kraft, n. (Equiv. to hand-craft, the i representing old prefix ge, as in handiwork). The skill of one's hands; work of an artisan, hobbyist, or tradesman, with or without special tools or equipment; a craft sometimes identified with a nation or region and oftentimes artistic; an object produced by handicraft. - hand.craft.er, n. One who engages in crafts as an occupation or hobby - hand.i-crafts.man." The definition in Stroud's Judicial Dictionary of words and phrases (4th Edition) (to which reference has been made in the order of the lower authorities also) reads as follows (Page 1208) : "Handicraft. [Workshop Regulation Act 1867 (c.146), s.4], "handicraft' shall mean any manual labour exercised by way of trade or for purposes of gain in or incidental to the making any article or part of an article, or in or incidental to the altering, repairing, ornamenting, finishing, or otherwise adapting for sale, any article." Making straw plait, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been fostered by the introduction of simplified methods and commercially produced kits for beginners. The market for handmade goods has grown, and a handicraft can sometimes become a quite profitable avocation. Handicrafts are employed to supply models for many industries, such as power weaving and automobile-body building." 20. We have, therefore, to see, with reference to the above definitions, whether the process of sawing the granite block into slabs and then polishing the, cut slab in order to manufacture the cut and one side polished slabs would, on the facts established in the present case, qualify the workmen employed therein as handicraftsmen and the product as a handicraft. The meaning assigned in the several dictionaries etc. noted earlier to the word handicrafts makes it clear that it is only such processes as are dependent on the individual manual artistic skill of the person engaged in the process that would make the resultant product a handicraft though in the exercise of such skill the person may utilise certain special tools or equipment. It appears to us that such special tools or equipment would also refer to specialized individual tools, may be in cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a handicraft in the trade there would have been no need to sub enumerate the same under S. No. 7.2 since that would have automatically been included in S. No. 7.1 which reads "handicrafts". Therefore the inclusion of cut and polished granite under the main heading 'handicrafts' appears to be only by way of a deeming fiction for the purpose of the said ITC policy. As earlier mentioned, the appellants have not produced any other proof of trade parlance under which cut and polished granite slabs are known as handicrafts. 23. The result of the above discussion would be that the appellants would not be entitled to benefit of exemption under Notification No. 234/82 with reference to their manufacture of cut and one side polished granite slabs. 24. But then the question would be whether this conclusion should be made applicable with reference to the demand for the period November, 1983 to March, 1986. The answer to this question would involve the consideration of several issues. One would be whether the extended period of limitation under Section 11-A of the Central Excises and Salt Act, would be available to the Deptt. The second would be whether in view of the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larger or the normal period of limitation would be available on the facts and in circumstances of the case the question of the validity of all these notices will have to be determined. 26. We have already noticed that there does not appear to have been, or at least there is no proof of, any change in the manufacturing process adopted by the appellants. It appears that the process throughout continued to be the same. In their letter dated 22-5-1982 the appellants had claimed that the product manufactured by them did not invite imposition of excise duty since no manufacture, as defined under Section 2(f), was involved. The Deptt. had evidently questioned the said assertion, as they had, in that connection, issued the notice dated 20-9-1982. The appellants had replied under their letter dated 6-10-1982 that in any event the goods were exempt as they were handicrafts. In his order dated 3-11-1982 the Assistant Collector held the product excisable and summarily rejected the claim to be treated as handicrafts. Thus the appellants and the Department had joined issue even in 1982 as to the process of manufacture, the legal effect thereof and the claim for exemption. Once parties had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, the larger period of limitation would be available, does not appear to be correct. 27. In this view if the demand is to be considered only with reference to the notice dated 19-6-1986 (issued by the Collector) the demand for duty will have to be set aside for the major portion and be taken up for consideration only for the period 19-12-1985 to March, 1986. But, as already stated, the Collector had made it clear that his adjudication was with reference to the earlier show cause notices also. Each of the said show cause notices related to a specific period. As earlier noted the Collector evidently adjudicated on the earlier four notices also because no orders had been passed by the Assistant Collector on these four notices till Section 11-A was amended. If has, therefore, to be held that the Collector's adjudication was on the earlier four notices as also his own notice dated 19-6-1986. In that event, the notice dated 19-6-1986 will have to be considered as relating to the period September, 1985 to March, 1986 since the earlier period November, 1983 to August, 1986 is covered by the earlier four notices. Hence the validity of the demand covered by the order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sman." It is therefore clear that the Collector (Appeals) proceeded on the basis that the cutting and polishing was mainly by manual operations involving manual skill of the operator. He does not appear to have taken into consideration the use of machinery. As earlier mentioned, the appellants themselves have agreed (in the passage extracted earlier) that they had not been giving details of various processes involved except claiming that the goods will be handicrafts by reason of the Commerce Ministry classification. In the circumstances while it may be true that the appellants were not guilty of suppression of facts it would not, for that reason, be correct to hold that no further facts than were available to the Collector (Appeals) had emerged due to investigation by the Department subsequent to that order, which new facts would entitle the Deptt. to have a fresh look in the matter of classification and eligibility for exemption. We have already seen that if the extensive use of sophisticated power driven machinery is taken into consideration the right to claim the goods to be handicrafts would be found to be illusory. 30. We therefore hold that while it was not open to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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