1989 (5) TMI 219

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..... that the goods are manufactured out of duty-paid steel pipes received from their customers on returnable basis and that the process carried out in their factory does not change the basic character of the steel pipes as such. It is contended that the object of the process is only to make the products rust and corrosion free and suitable for underground laying. The lower authorities, however, have denied the exemption claimed on the ground that as a result of the lining and coating of steel pipes with cement mortar, the steel pipes are converted into a new product. It is against these orders that appellants ^are now before us. 2. We have heard S/Shri A.K. Jain and Moti Ajwani, on behalf of the appellants and Shri J.N. Nigam, SDR, for the De .....

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..... one, the steel pipes would not be fit for underground water conveyance. Therefore, it is the mortar coating which should be considered as giving the product its essential character. 8. Our attention is drawn to the copy of the agreement concluded by the appellants in regard to the impugned product. It is pointed out that reference to various provisions of the agreement would clearly show that the intention is to produce a new product. 9. It is the functional character of the product which should determine classification, says the learned SDR, relying on the decision of the Supreme Court in the case of Atul Glass Industries Ltd. & Others v. Collector of Central Excise & Others -1986 (25) E.L.T. 473 (S.C.) and in the case of M/s. Annapurna .....

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..... d out that the operative part of the order relates to process on spot which is not the case here. 13. We have carefully considered the facts of the case and the submissions made before us. We find that so far as the classification of the product is concerned, this has been gone into by the Tribunal in the context of the old Tariff. 14. It is true that in the context of the new Tariff, it is necessary to go into the essential character in such a case, but this is precisely the point determined in the Tribunal's order relating to M/s. FACT Engineering Works (Supra). We entirely concur that it is not the mortar coating which gives to the product its essential character, but the base, that is, steel pipes. We also hold that the product is not .....

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