TMI Blog2012 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... n quality does not amount to manufacture. Thus, PMB or CRMB cannot be treated as bituminous mixtures falling under CSH 27150090 and shall continue to be classified under CSH 27132000 pertaining to tariff for petroleum bitumen. - Decided against the Revenue. - Civil Appeal Nos. 4055-4056 of 2009 with Civil Appeal No. 5633 of 2009 and Civil Appeal No. 7142 of 2010 - - - Dated:- 13-1-2012 - D.K. Jain, Asok Kumar Ganguly, JJ. JUDGMENT D.K. Jain, J This batch of appeals by the revenue, under Section 35L(b) of the Central Excise Act, 1944 (for short the Act ) arises out of final orders dated 23rd December, 2008 in Appeal No. E/379/2007; 25th September, 2008 in Appeal Nos. Excise/522 523/2007 [2009 (240) E.L.T. 115 (Tri. - Bang.)] and 28th October, 2009 in Appeal No. E/225/2009 passed by the Customs, Excise Service Tax Appellate Tribunal South Zonal Bench, Bangalore (for short the Tribunal ). By the impugned orders in cross-appeals by the revenue and the assessee, the Tribunal has held that the mechanical mixing of polymer with heated bitumen does not amount to manufacture of a new commercially identifiable product and therefore, is not exigible to Excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 3901 Polymers of ethylene, in primary forms 3901 90 Other 4. The assessee had been paying Central Excise duty on the PMB processed at their factory in Mumbai but had not paid the same for the conversion done at the work site. Consequently, a show cause notice was issued to them by the Commissioner of Central Excise, Bangalore (hereinafter referred to as the Commissioner ), demanding duty in respect of PMB falling under sub-heading 271500.90 of the Tariff Act, for the period from 18th August 2004 to 19th September 2006. The Commissioner adjudicated upon the said show cause notice and vide Order-in-original, dated 23rd April 2007, held that the aforesaid process carried out by the assessee amounted to manufacture of PMB in terms of Section 2(f) of the Act, irrespective of the fact whether such process was carried out on their own account or on job work basis and therefore, was dutiable. He accordingly, confirmed the demand indicated in the show cause notice. Aggrieved thereby, the assessee filed an appeal before the Tribunal. Reversing the decision of the Commissioner, the Tribunal has come to the conclusion that since PMB cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itumen did not amount to manufacture, was wrongly relied upon by the Tribunal as it had subsequently been modified by Circular No. 88/1/88-CX.3, dated 1st July, 1988, wherein the said department had clarified that duty would be chargeable on blown-grade bitumen. 6. Per contra, learned counsel appearing on behalf of the assessees, led by Mr. S.K. Bagaria, senior advocate, while supporting the decision of the Tribunal, fervently submitted that based on the documents, evidence and materials on record, the Tribunal has found, as a fact, that the process of mixing an insignificant dose of polymer with duty paid bitumen only enhanced the quality of bitumen and did not amount to manufacture and therefore, in the absence of any plea of perversity, the finding does not warrant any interference by this Court. In support of the proposition, learned senior counsel placed reliance on the decisions of this Court in Commissioner of Central Excise, Bangalore v. Ducksole (I) Ltd. Ors., (2005) 10 SCC 462 = 2005 (181) E.L.T. 205 (S.C.) and Commissioner of Central Excise, Delhi-III v. UNI Products India Ltd. Ors., (2009) 9 SCC 295 = 2009 (241) E.L.T. 491 (S.C.). 7. Learned senior counsel vehem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s placed on the decisions of this Court in Commissioner of Central Excise, New Delhi-I v. S.R. Tissues Pvt. Ltd., 2005 (186) E.L.T. 385 (S.C.) and Shyam Oil Cake Ltd. v. Collector of Central Excise, Jaipur, 2004 (174) E.L.T. 145 (S.C.). 9. Relying on the two afore-mentioned Circulars, F.No. 88/1/87- CX.3, dated 16th June 1987 and F.No. 88/1/88-CX.3, dated 1st July 1988, issued by the Department of Revenue, Ministry of Finance, clarifying that blown grade bitumen produced by oxidation of straight grade bitumen is not liable to duty; learned senior counsel submitted that the present case is on a much better footing than the blown grade bitumen, inasmuch as, unlike oxidation, where chemical change takes place, in the mixing of polymer and bitumen, no chemical change in bitumen takes place, and therefore, PMB cannot be subjected to Excise duty as a new commercial commodity. Additionally, reliance was also placed on Circular No. 623/14/2002-CX., dated 25th February, 2002, wherein the Central Board of Excise and Customs has clarified that the process of preparation of Hot Asphalt Mix used in making roads does not amount to manufacture as contemplated under Section 2(f) of the Act. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06) 4 SCC 85 = 2006 (196) E.L.T. 400 (S.C.) and HPL Chemicals Ltd. v. Commissioner of Central Excise, Chandigarh, (2006) 5 SCC 208 = 2006 (197) E.L.T. 324 (S.C.). 12. Lastly, the learned counsel stressed that in the light of the decisions of this Court in Commissioner of Central Excise Customs v. Tikatar Industries, 2006 (202) E.L.T. 215 (S.C.); Commissioner of Central Excise, Navi Mumbai v. Amar Bitumen Allied Products Private Limited, 2006 (202) E.L.T. 213 (S.C.) and Commissioner of Central Excise, Mumbai v. Tikitar Industries, 2010 (253) E.L.T. 513 (S.C.), the issue raised by the revenue in these appeals is no longer res integra, and therefore, all the appeals deserved to be dismissed. 13. Mr. Laxmi Kumaran, learned counsel appearing for the assessee in Appeal No. 7142 of 2010, while adopting the arguments advanced by Mr. Bagaria, emphasised that apart from the fact that in his case the assessee was mixing the additives at the site and not in a factory, the percentage of polymer or additives added to bitumen was inconsequential for determination of the issue at hand, as the predominant test was whether the treated bitumen underwent any change in its characteristics so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression manufacture in Section 2(f) of the Act in Shyam Oil Cake Ltd. (supra), this Court had held as under :- 16. Thus, the amended definition enlarges the scope of manufacture by roping in processes which may or may not strictly amount to manufacture provided those processes are specified in the Section or Chapter notes of the Tariff Schedule as amounting to manufacture. It is clear that the Legislature realised that it was not possible to put in an exhaustive list of various processes but that some methodology was required for declaring that a particular process amounted to manufacture. The language of the amended Section 2(f) indicates that what is required is not just specification of the goods but a specification of the process and a declaration that the same amounts to manufacture. Of course, the specification must be in relation to any goods. xxx xxx xxx xxx xxx xxx xxx xxx 24. In this case, neither in the Section Note nor in the Chapter Note nor in the Tariff Item do we find any indication that the process indicated is to amount to manufacture. To start with the product was edible vegetable oil. Even after the refining, it remains edible vegetable oil. As actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace. In this behalf the following observations by the Constitution Bench of this Court in Tungabhadra Industries (supra) are quite apposite : In our opinion, the learned Judges of the High Court laid an undue emphasis on the addition by way of the absorption of the hydrogen atoms in the process of hardening and on the consequent inter-molecular changes in the oil. The addition of the hydrogen atoms was effected in order to saturate a portion of the oleic and linoleic constituents of the oil and render the oil more stable thus improving its quality and utility. But neither mere absorption of other matter, nor inter-molecular changes necessarily affect the identity of a substance as ordinarily understood The change here is both additive and inter- molecular, but yet it could hardly be said that rancid groundnut oil is not groundnut oil. It would undoubtedly be very bad groundnut oil but still it would be groundnut oil and if so it does not seem to accord with logic that when the quality of the oil is improved in that its resistance to the natural processes of deterioration through oxidation is increased, it should be held not to be oil. (Emphasis supplied by us) 20. In De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity. (Emphasis supplied by us) 23. Having considered the matter on the touchstone of the aforesaid legal position, we are of the view that the process of mixing polymers and additives with bitumen does not amount to manufacture. Both the lower authorities have found as a fact that the said process merely resulted in the improvement of quality of bitumen. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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