9911796707
TMI Blog1996 (12) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... rst sale of the product of the extended unit was effected on October 30, 1993. The applicant-company obtained licence under the Central Excises and Salt Act, 1944 as a manufacturer of CR strips and the Central excise authorities have been treating it as a manufacturer of that product. Total value added to the finished product is about 20 per cent over the value of the inputs, namely, HR strips. HR strips and CR strips are completely different commercial commodities with different uses and character. HR strips can be used by tube and pipe manufacturers and cold reducers. CR strips are used for manufacturing steel furniture, automobile bodies, refrigerators, casings, cooking range, drums, barrels, etc. The two items do not serve the same purpose. The Indian Standards Institution has given separate specifications for HR strips and CR strips, namely, IS 10748 and IS 153 respectively. The applicant prayed for amendment of registration certificate under the Bengal Finance (Sales Tax) Act, 1941 (in short, "the 1941 Act") for addition of manufacture of CR strips out of HR strips used as raw materials by purchasing the latter at a concessional rate of tax. From the fact that the sales tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h HR strips and CR strips fall under the same sub-clause of section 14(iv) of the 1956 Act. The judgment of this Tribunal in the case of Precision Strips Private Limited [1996] 102 STC 82 was also cited by the applicant. The respondent No. 1 reserved the order, but informed Mr. B.N. Saraf, applicant's advocate, that he would cancel the E.C. on the instructions of its superior officers. However, no written order has been communicated to the applicant. 3.. The contention of the applicant is that it is a manufacturer of CR strips, although CR strips manufactured out of HR strips cannot be subjected to tax by the State Revenue in terms of section 15(a) of the 1956 Act because the two commodities fall under the same sub-clause of section 14(iv) of the 1956 Act and because sales tax was paid on purchases of HR strips which are used as raw materials. A manufacturing process is involved for production of CR strips out of HR strips. The two are commercially different commodities. The applicant contends that the extended unit in which CR strips are produced was set up with the particular object of manufacture of that item, and for that purpose plant and machinery consisting of skin pass mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 102 STC 82 (WBTT) are distinguishable. Every processing does not amount to manufacture. Although by processing CR strips acquire some qualitative change, the activity does not amount to manufacture within the meaning of section 2(dd) of the Act of 1941 or section 2(17) of the 1994 Act. The applicant is, therefore, not entitled to benefit of remission under section 10G of the Act of 1941 or section 41 of 1994 Act. 5.. The applicant-company has used an affidavit-in-reply, mainly reiterating its case and refuting the position taken by respondents. Along with the reply, applicant has filed views of several experts to the effect that HR strips and CR strips are two different commercial products catering to different industries. HR strips is a structural item generally used in construction and fabrication industry. CR strips is an engineering product mainly used in automobile, white goods, consumer products and furniture industry. The two are covered by different ISI specifications. Such views have been given by Grey Engineering Consultants, Shalimar Paints Limited, Calcutta Steel Chamber, Steel Authority of India Limited and Organisation of Indian Engineering Industry. 6.. The point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of South Bihar Sugar Mills Ltd. v. Union of India AIR 1968 SC 922, that the word "manufacture" implies a change but every change in the raw material is not manufacture ; there must be such a transformation that a new and different article must emerge having a distinctive name, character and use. 8.. It is undisputed that in terms of section 2(dd) no manufacture or manufacturing process has yet been prescribed so as to exclude the same from the ambit of the definition of "manufacture". Therefore, the expression means producing, making, extracting or blending any goods. The abovequoted meaning from Black's Law Dictionary and the abovementioned reference to the decision reported in AIR 1968 SC 922 (South Bihar Sugar Mills Ltd. v. Union of India), make it clear that it will be a manufacture, if the end-product is a different commercial commodity and the process of manufacture is such that the end-product takes the character of a new and distinct commodity with reference to the raw material which may either be in the raw form or in a prepared form. 9.. In the present case, there is no dispute that the applicant uses HR strips which are themselves a commercial commodity as raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... together) of grains. When such deformation is caused in a metal body at room temperature (below the recrystallisation temperature) it is said to have undergone cold working. Cold rolling is a process of cold working, generally applied to reduce the size of a metal section from its earlier size attained through hot rolling. It is a genetic term applied to the operation of passing an unheated metal through a set of rolls for the purpose of reducing thickness, producing a smooth surface and improving mechanical properties. Hot rolled coils/strips and sheets are required to undergo pickling, washing, drying and oiling operations before cold rolling. The oil on the steel surface serves as lubricant during cold reduction besides protecting the product from rusting. Unlike hot rolling, one has to apply much higher pressure and driving force to effect any reduction in section in cold stage. During cold rolling, the steel is kept under tension between the pay off reel-work rolls-recoil reel and simultaneously under compression due to pressure applied on rolls. For any given pass (i.e., one time passing of the steel through a set of work rolls) in the cold rolling process, the resultant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducibility and inter-changeability. 5. Strength, fatigue, and wear properties are improved. 6. Directional properties can be imparted. 7. Contamination problems are minimized." 10.. From the above discussion it is clear that although HR strips, and CR strips both are strips and therefore fall within the same sub-item (vi) of section 14(iv) of the 1956 Act, and although no sales tax can be levied under the State's sales tax laws on CR strips processed out of HR strips, if sales tax was paid at the time of purchases of HR strips, the two are in every other respect and for all other purposes different commodities as well as different commercial commodities. Respondents have failed to establish that HR strip, and CR strips are considered as the same goods in common parlance, and they have adduced no such material. On the contrary, from the materials produced by applicant and the technical books available to us, we have no manner of doubt that the two are different commercial commodities. The ISI specifications which support the claim of applicant, cannot be so easily brushed aside, as contended by respondents. The procedure of finalising ISI specifications clearly indicates that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to sales tax. This case was followed by this Tribunal in the case of Precision Strips Pvt. Ltd. [1996] 102 STC 82 in respect of HR strips and CR strips. It was held therein that where the applicant purchased cold rolled steel strips paying sales tax and furnishing declarations, then hardened and tempered the same and sold them, what was produced was certainly a different commodity for the purpose of use in specified industries for specified purposes, but they remained "strips" as understood within the meaning of sub-item (vi) of section 14(iv) of the 1956 Act. Mr. Bajoria also relied on the decision of this Tribunal in the case of Hindusthan Wires Limited [1995] 97 STC 652; [1994] 27 STA 190 in which it was held that the sales tax laws deal with commercial character of goods. The different sub-items of section 14(iv) of the 1956 Act make special types of enumeration in order to indicate that, departing from the general principles of sales tax laws for treating certain goods as the same or different, the declared goods enumerated in a particular sub-item should be treated as the same goods for the purpose of the 1956 Act, despite the fact that a manufacturing process had been go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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