TMI Blog2011 (7) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... respective Statutes but when this Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Courts or the Tribunal, as the case may be, to direct that the Board's Circular should be given effect to and not the view expressed in a decision of this Court or a High Court. Assessee is not eligible to claim exemption since the water being an important input for the manufacturing process of "Rosin" and "Turpentine Oil", its further lifting upto the height of 30 ft. with the aid of an electric motor for the purpose of condensing the vapours of Turpentine Oil, it cannot be said that the said goods were being manufactured without the aid of power. - CIVIL APPEAL NO. 7627 OF 2005, 5809 OF 2007, 4663-4665 OF 2008 - - - Dated:- 11-7-2011 - D.K. JAIN, H.L. DATTU, JJ. J U D G M E N T D.K. JAIN, J.: 1. The Commissioner of Central Excise has preferred this batch of Civil Appeals under Section 35-L(b) of the Central Excise Act, 1944 (for short "the Act"), questioning the correctness of the orders passed by the Customs, Excise and Service Tax Appellate Tribunal, West Regional Bench at Mumbai (for short "the Tribunal" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down; the impurities are separated and purified raw material is transferred in the main tank (Distillery) where it is again heated upto 1800C; at this temperature, the vapours of turpentine oil are formed and finally the "Turpentine Oil" is collected by the process of distillation through the condensers by sprinkling water on the condensers from the water storage tanks installed at a height of 30 ft.; water for the tanks is lifted from the storage tanks at the ground level by using 2 Hp electric motor. "Rosin" which settles down in the Distillery, is collected separately. The Deputy Commissioner was of the view that the water being an important input for the manufacturing process of "Rosin" and "Turpentine Oil", its further lifting upto the height of 30 ft. with the aid of an electric motor for the purpose of condensing the vapours of Turpentine Oil, it cannot be said that the said goods were being manufactured without the aid of power. He accordingly held that the assessee was liable to pay Central Excise duty at the aforesaid rate. 4. Being aggrieved, the assessee preferred appeal to the Commissioner of Customs and Central Excise (Appeals). The Commissioner (Appeals), affirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al are clearly erroneous in as much as it failed to appreciate that: (i) without the process of condensation of vapours, the final products i.e. "Turpentine Oil" "Rosin" cannot be manufactured; (ii) condensation is not possible without sprinkling of water on the copper stills/coils containing vapours of Turpentine and (iii) for sprinkling of water lifting of water to a particular height with the aid of an electric motor is essential, otherwise water would not fall on the coils by the force of gravity. It was thus, argued that water being an integral part of the manufacturing process, which would include all stages and all processes which are necessary for the final product, its lifting to the overhead tank is a process in relation to the manufacture of the final product and since that process requiring the aid of power is integrally connected with the manufacture, the assessee is not entitled to exemption from duty. It was asserted that the clarification issued in the year 1978, having been rescinded vide Circular dated 27th May, 1994, the Tribunal was not justified in relying on the same, more so, when the issue before the Tribunal stood concluded by the decisions of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture;" 12.It is manifest that clause (f) gives an inclusive definition of the term "manufacture". According to the Dictionary meaning the term "manufacture" means a process which results in an alteration or change in the goods which are subjected to the process of manufacturing leading to the production of a commercially new article. Therefore, manufacture is an end result of one or more processes through which the original commodities are made to pass. The nature and extent of processing may vary from one case to another. There may be several stages of processing, different kinds of processing at each stage and with each process suffered, original commodity experiences a change but it is only when a change or series of changes that takes the commodity to the point where commercially it can no longer be regarded as an original commodity but instead is recognized as a new and distinct article that "manufacture" can be said to have taken place. It is trite that in determining what constitutes manufacture no hard and fast rules of universal application can be devised and each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case one of the assessees was manufacturing common salt and for its manufacture, brine was pumped into salt pans by using a diesel pump and then lifted to a platform by the aid of power. In the second case for manufacturing lime from coke and limestone, the raw materials were lifted to a platform at the head of the kiln with the aid of power. The question was as to whether lifting of salt pans to a platform by the aid of power and the lifting of raw material to a platform at the head of the kiln with the aid of power constituted process in or in relation to manufacture? Referring to earlier decisions of this Court, including Delhi Cloth General Mills Co. Ltd (supra) and M/s J.K. Cotton Spinning Weaving Mills Co. Ltd. (supra) the Court observed thus: "20. A process is a manufacturing process when it brings out a complete transformation for the whole components so as to produce a commercially different article or a commodity. But, that process itself may consist of several processes which may or may not bring about any change at every intermediate stage. But the activities or the operations may be so integrally connected that the final result is the production of a commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture" will be with the use of power; (iii) if power is used at any stage then the argument that power is not used in the whole process of manufacture, using the word in its ordinary sense, will not be available; (iv) the expression "in the manufacture" would normally encompass the entire process carried on for converting raw material into goods; (v) if a process or activity is so integrally connected to the ultimate production of goods that but for that process, manufacture or processing of goods is impossible or commercially inexpedient then the goods required in that process would be covered by the expression "in the manufacture of"; (vi) it was not necessary that the word "manufacture" would only refer to the stage at which ingredients or commodities are used in the actual manufacture of the final product and (vii) the word "manufacture" does not refer only to the using of ingredients which are directly and actually needed for making the goods. 17.Having considered the present case on the touchstone of the aforenoted parameters, we are of the opinion that the activity of the assessee in first lifting the water for filling up of the storage tank at the ground level and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly decides and not for what logically flows from it, the precise exercise the Tribunal undertook in the instant case for distinguishing the said decision, by observing thus : "We observe that the Supreme Court in that case deals with the use of power while handling the raw material prior to the commencement of process of production. It is nobody's case in the present application that the water that is pumped to the overhead tank is a raw material used in the manufacture of "Rosin"." In Rajasthan State Chemical Works (supra), the question of law for determination was as to what kind of "process" carried on in respect of particular goods constituted "process" in or in relation to "manufacture" for the purposes of and within the meaning of Section 2(f) of the Act. It was held that any activity or operation, which is an essential requirement and is so integrally connected with further operations for production of ultimate goods that but for that process the manufacture of the final product is impossible, would be a process in or in relation to manufacture. In fact, it is manifest from the afore-extracted paragraph of the judgment that the contention of the assessee that since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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