TMI Blog1990 (10) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing operation of glass and glassware was undertaken was segregated from the premises in which the machinery for printing of glass bottles with ceramic colours was to be installed for carrying on the printing operation. On 8-2-83, the Superintendent (Central Excise) approved the revised plan. On 5-3-83, they have informed the Central Excise authorities that the premises segregated, namely, ACL Unit in the plan would be used exc lusivefy for storing duty-paid glass bottles for the purpose of carrying out decoration of bottles. The appellants have commenced the process of printing of bottles in the separate demarketed unit. No excise licence was taken for the unit, where printing was carried out. On 29-6-83, the Superintendent, directed the appellants not to remove any printed bottles without payment of Central Excise duty on enhanced value. The appellants filed an appeal before the Collector (Appeals) challenging the directive issued by the Superintendent (Central Excise). The Collector remanded the matter to the Assistant Collector to initiate proceedings after complying with the principles of natural justice. In pursuance of the remand order, the Assistant-Collector issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises is not manufacture within the meaning of Sec. 2 (f) and the segregated premises is not factory within the meaning of Sec. 2(e) of the Act. Therefore, the cost of printing in the bottles is not includible in the assessable value. 6 The printing on bottles does not amount to manufacture. Shri Chidambaram, Ld. Counsel appearing on behalf of the appellants, pointed out that the Gujarat High Court in the case otExtrusion Process Pvt. Ltd. v. N.R. Jadhav, Superintendent of Central Excise -1979 (4) E.L.T.(J 38) dealing with extruded aluminium collapsible tubes held that Printing and lacquering cannot be said to be manufacture or incidental or ancillary to the completion of manufacture . In order to counter the above judgment, the Parliament inserted by Finance Act of 1980 clause (viii) under Sec. 2(f) of the Act, according to which manufacture in relation to aluminium includes lacquering or printing or both of plain containers . Therefore, it is only by virtue of the extended definition lacquering or printing is brought under the definition of manufacture . If laquering or printing as such is manufacture , there is no need to amend Sec. 2 (f) and insert clause (viii). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... glassware, cannot be regarded as precincts unless the operations carried out in that area come within the definition of manufacture or any process connected with the production of excisable goods , namely, glassware. 8. As against the above, the S.D.R. submitted that the ACL Unit is factory within the meaning of the definition of factory under Sec. 2(e) of the Act. In support of his contention, he relied on Cothas K. Prakash v. Collector of Central Excise -1987 (32) E.L.T. 790. He also submitted that failure to refer to the relevant provisions of the Act does not vitiate the show cause notice as long as there is power to initiate the proceedings. The proposal in the show cause notice is to re-determine the assessable value and the consequences of which is to recover the differential duty. Therefore, Section 11A is applicable. He also submitted that with an intention to evade the excise duty, they have bifurcated the factory into two units and without permission of the Central Excise Officers, the goods cannot be removed from one unit to another. Therefore, the ACL Unit is a part of the factory. He also submitted that the Superintendent is not competent to approve the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof wherein any part of which excisable goods other than salt are manufactured or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on . 12. The word including is not a term restricting the word premises , but is a term which enlarges the s.c.ope of word premises . Therefore, open land as well as buildings should be taken as factory [H. Bhiwandiwala v. State of Bombay : AIR 1962 (S.C.) 29]. The term precincts is usually understood as a space enclosed by walls. 13. Admittedly, the ACL Unit is located in an enclosed space with an opening on the main road apart from the gate of the factory licensed for the manufacture of glassware. The shed in which the ACL Unit is located, was also excluded from the lay out of the factory. From the above, it follows that the ACL unit, which was carved out of the old premises is a space covered by walls and is adjunct to the principal premises i.e. the licensed premises. Therefore, it is a factory within the meaning of Sec. 2 (e). The removal from the precincts is relevant for the purpose of determining the assessable value and therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Id. counsellor the petitioner has to be rejected, since in my view, the Supreme Court has not in ..... clear terms and categorically approved the view of the Gujarat High Court, but have observed with a note of caution, that the question whether a particular process is process of manufacture or not, has to be determined naturally having regard to the well-known tests laid down by the Supreme Court". 17. We are also of the view that the Supreme Court has not categorically approved the ratio of the Gujarat High Court decision in N.R. Jadhav and we reject the contention of the Id. counsel. We may also point out that the judgment of the Gujarat High Court in N.R. Jadhav s case is the subject matter of the Special LeaveJPetition pending in the Supreme Court. 18. We are also aware that the extended definition under Section 2(f) (viii) was struck down by the Bombay High Court whereas the Karnataka High Court upheld the same. However, these relate to the lacquering and printing of aluminium and does not deal with glass and glasswares. We are also aware that similar definition is not inserted in so far as glass and glasswares. But now it is well-settled that whether a particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or several processes, manufacture takes place and liability to pay duty is attracted. (Empire Industries Ors.). 21. As stated above, there is a transformation of plain bottles into printed bottles and the degree of transformation is not relevant for the purpose of determining the taxable event as long as the commodity is known commercially as a separate and distinct commodity from the original commodity. In our view, the transformation of plain bottles into printed bottles which are known commercially as a separate and distinct commodity is a process of manufacture. 22. It is true that by Finance Act 1980 in the case of aluminium, clause (viii) was introduced to counter the Judgment of N.R. Jadhav s case. However, we cannot draw an inference from the above that printing and lacquering in the case of glass and glassware is. not manufacture. As stated in the earlier paragraphs, whether a particular process amounts to manufacture or not is to be determined in the light of the test laid down by the Supreme Court. 23. Printing and decorating is manufacture in the facts and circumstances of the case and is carried on in the precincts adjunct to the main factory. Since manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
