TMI Blog2003 (6) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... ai, calling upon the appellants in Appeals E/2550 and 2551/01 to pay duty of Rs. 42,89,48,256/- under the proviso to sub-section (1) of Section 11A of the Central Excise Act. The notice also proposed to impose penalty of equal amount under Section 11AC of the Act. The notice also proposed to levy interest and confiscate land, building, etc. In the notice, it has been specifically stated in paragraphs 9 to 9.4 as follows :- 9. It is seen that flat-rolled products of iron or non-alloy steel of a width of 600 mm or more and hot-rolled are classifiable under Heading 72.08 of the Schedule to CETA, 1985. Similarly, flat-rolled products of iron or non-alloy steel of a width of 600 mm or more and cold-rolled (cold-reduced) are classifiable under Heading 72.09 of the Schedule. The flat-rolled products of iron or non-alloy steel having specific dimensions of a width of less than 600 mm are classifiable under Heading 72.11 of the Schedule. The process of conversion of hot-rolled flat-rolled products of iron or non-alloy steel of a width less than 600 mm of required dimensions leads to emergence of a commercially distinct commodity. The goods falling under Heading No. 72.08 are being transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han 600 mm into products of a width of less than 600 mm of required dimensions amounts to manufacture as per Section 2(f) of CEA, 1944 and chargeable to excise duty in terms of Section 3 of CEA, 1944 at the rate specified in Heading 72.11 of the Schedule to the CETA, 1985. Similarly, it was seen that flat-rolled products of stainless steel of a width of 600 mm or more are classifiable under Heading 72.19 and flat-rolled products of stainless steel of a width of less than 600 mm are classifiable under Heading 72.20. The process of conversion of flat-rolled products of stainless steel of a width less than 600 mm of required dimensions leads to emergence of excisable goods having distinct name, character and use falling under Heading 72.20. Thus the above process of conversion of flat-rolled products of stainless steel from a width of more than 600 mm amounts to manufacture as per Section 2(f) of CEA, 1944 chargeable to excisable duty under Section 3 of the CEA, 1944 at the rate specified in Heading No. 72.20 of the Schedule to CETA, 1985. It was observed during the investigation that M/s. Vijlal Vithaldas Sons were engaged in the manufacture of flat-rolled products of stainless ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having distinct name, character and use and falling under different headings of the Schedule to the Central Excise Tariff. It is also observed that the manufacturing process involves significant value addition due to cost incurred on various items like consumption of electricity, deployment of labour, loading and unloading charges, etc. for conversion of HR/CR/SS coils into flat-rolled slitted products of width less than 600 mm. It was also observed that each of the coils received in the premises of M/s. Vijlal Vithaldas Sons had a distinct coil No. and specifications provided by the original manufacturer of the said coils. The conversion of HR/CR/SS coils of a width more than 600 mm into flat-rolled products of width less than 600 mm and other flat-rolled products resulted in the loss of identity of each of these coils. The annexure A to show cause notice states as follows :- Details of CR/HR coils slitted and Central excise duty to be paid by M/s. Vijlal Vithaldas Sons, Taloja Year Quantity Total Assessable Value Rate of Duty Central Excise Duty not paid 1995-96 35,990 74,74,49,981 15% 11,21,17,497 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember, 2001 issued from File No. 139/12/99-CX has treated such an activity as not amounting to manufacture if the resultant coils after slit fall within the same heading of the Tariff. He also stated that the issue has been fully dealt with by the Tribunal in CCE v. Bemcee Ltd. reported in 2003 (151) E.L.T. 545 which decided the same question in favour of the assessees. In that decision, it is specifically contended by learned Counsel, Shri V. Sridharan, that the judgments of the Supreme Court in the cases of CCE v. Kapri International (P) Ltd. - 2002 (142) E.L.T. 10 and Lal Woollen Silk Mills (P) Ltd. - 1999 (108) E.L.T. 7 have been considered and having noted these judgments, the Tribunal has held that the activity of slitting and cutting would not amount to manufacture. He also cited that the case of CCE v. Markfed Vanaspati Allied Indus. - 2003 (153) E.L.T. 491 where in paragraph 6, the Supreme Court held that the Lal Woollen and Silk Mills case decided by the Supreme Court was held to be per incuriam, as it did not take note of the judgment rendered by Larger Bench of the same court in the case of CCE v. Universal Cable Ltd. - 1995 (77) E.L.T. 268 (S.C.). It is the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture of wool, it is wool when it is on the sheeps back; it is wool when it has passed through the process of sorting and picking which it has to go through in the mill. Is not that the manufacture of wool? I should have thought it most certainly was, although the name wool is applied to it both before the process begin and after it has ended. It is therefore emphasised by the learned Departmental Representative that after the cutting and slitting of the products here, there is a transformation has taken place and it has been treated as different type of commodity. They also relied on the proposition of law that the products in respect of steel were transformed from items contained in Headings 72.08 and 72.09 to 72.11. The learned DR also cited the judgment of the Tribunal in the cases of Dipen Textiles (P) Ltd. v. CCE - 1992 (62) E.L.T. 430 and Filtech Pharma Lab. Pvt. Ltd. v. CCE - 2000 (120) E.L.T. 372. They also cited the judgment of the Supreme Court in the case of CCE v. Kapri International P. Ltd. [2002 (142) E.L.T. 10 (S.C.) = 2002 (50) RLT 1]. 8. We have considered the rival submissions. The case of the department is that when the hot-rolled steel coils of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue Act, 1903, and to obtain from an officer of Inland Revenue a book such as was prescribed by the Regulation No. 633 of the Statutory Rules, 1904, inasmuch as the substance with which the appellants dealt was always saccharin both before and after their treatment of it. Bray J. observed at Pages 359-360 of the report as follows :- We have to determine whether upon the facts stated in the case the appellants did manufacture saccharin. Let us see what those facts are. One of the admitted facts is that saccharin is a substance produced from toluene sulphonamide. That is the definition of saccharin. This saccharin was not produced by the appellants from toluene sulphonamide; it was produced (if it can be said to have been produced) from saccharin itself. The appellants have not manufactured saccharin from toluene sulphonamide. The case states that 330 saccharin is produced without eliminating certain para products, or only eliminating them to a very small extent. Then, in order to convert 330 saccharin into 550, certain of the para compounds have to be eliminated. Then it states that this mixture (that is, the 330) is known commercially as 330 saccharin . The other mixture is kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sibly say that he was a leather manufacturer, but it would be possible to say that a man who took leather and make it into boots manufactured leather but made boots. I think it would be possible to say that, and I am not sure it would not be strictly accurate but I cannot read this statute in that way. (emphasis supplied). Whether it would be possible to read manufacture etymologically as something very different from make , I think the Act of 1901 uses manufacture and make as being convertible terms, and that a man who manufactures saccharin under Section 9 is doing the same thing as is called the making of saccharin under Section 5, of the manufacturing of glucose or saccharin under sub-section (2) of Section 5, and that the appellants did not make saccharin, because they began and ended with saccharin. They did not make saccharin, and in my opinion, from the way in which the word is used by the statute, they did not manufacture saccharin, and therefore did not require a licence. 37. It may, however, be pointed out that when Darling J. dealt with the example of a carpenter, the learned Judge thought it was right that it could not be said that when box is prepared th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of furniture from wood that the carpenter uses the wood; he begins with wood and makes the wood into box size. But he specifically states that he was not sure it may not be strictly said that carpenter had manufactured the wood. He applies a process to it. He supposed etymologically that the manufacture is to make by hand. He finally comes to the conclusion that it is not a manufacture. But Rindley J. view has been reflected in paragraph 37 extracted above. The judgment of the Supreme Court accepted the reasoning of the learned judge Rindley s views. In the later paragraph, the learned judges of the Supreme Court on the basis of the views of Indian Standard Glossary of terms held that there was a manufacture. In fact in paragraph 39, they have said that the manufacture has taken place within the meaning of the amended expression manufacture. The question in that case has been clearly held in paragraph 42 of the said judgment that in terms of what is contained in entry 97 that the legislation is a valid piece of legislation. In our view, therefore, the reliance placed by the learned Departmental Representative, Dr. Hitesh Shah, may not be correct that the learned Judges have accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nor any evidence by means of affidavit from the persons who deal with them has been produced by the department, stating that the resultant products are known from having a different character, name and use as from the original product. As stated earlier, in the absence of the same, it will be very difficult for us to accept the case of the department. The subsequent judgment of Bemcee Ltd. - 2003 (151) E.L.T. 545 has been referred to by the learned Counsel for the appellant for this proposition, namely the change in classification of the final product from that of first product after processing is irrelevant for deciding the excisability. As far as the judgment of the Supreme Court in the case of Lal Woollen and Silk Mills (P) Ltd. is concerned, the same has been answered by the later judgment of the Supreme Court in the case of CCE v. Markfed Vanaspati Allied Indus. - 2003 (153) E.L.T. 491 (S.C.) referred to above. Therefore, in our view, in the absence of any material evidence furnished by the department, we are unable to agree with the stand taken by the department in the instant cases. Our comments regarding hot-rolled sheet products will equally hold good for plastic produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in existence serve no purpose but for the process. However, after having expressed the view, the court went on to decide that printing of names on glass bottles would not be manufacture because the basic character of the commodity does not change and they continue to be bottles. In other words, it applied the test adopted in Delhi Cloth and General Mills. It is therefore the test that has to be followed. The primary purpose of the tariff is to provide an instrument for taxing goods. The level of tax on the goods may be so formulated as to achieve not only collection of revenue, but such objects as restricting consumption or encouraging a particular sector of the industry. A tariff therefore would provide for classification to serve for ease of administration. Frequent amendments of the tariff take place. Thus, for example, sub-heading 84.55 for metal rolling, mills, parts thereof did not have any sub-heading before 1995. These sub-headings were introduced in 1995, one for parts and the second for goods other than parts. The tariff that we are concerned which is based on a Customs Tariff, one relating to import and export of goods. Such a tariff would not necessarily be based upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ylene, propylene, butylene and butadine. Heading 28.15 covers sodium hydroxide, potassium hydroxide. Nobody could seriously argue that making of sodium hydroxide is not from potassium hydroxide manufacture. This is in fact the view that has been taken by the Supreme Court in Laminated Packaging (P) Ltd. v. CCE - 1990 (49) E.L.T. 326 (S.C.) is contrary to such reasoning. 16. The fact that a particular product after being subjected to a process is classifiable in a different Tariff headings therefore does not establish that it is the result of the manufacture. The correct position then is that irrespective of where the products fall for classification whether the process satisfies the test laid down of the emergence of a commodity with a different names or character. 17. This disposes of the appeals relating to iron and steel. The department s contention with regard to plastic in the remaining appeals has no reference to the Tariff headings. The contention is that the processes of cutting into narrow widths renders the product adaptable to a more specific use. Thus cutting into narrower widths of metallized polyester film by Jalpac India Ltd. and Garware Polyester Ltd. has been h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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