TMI Blog2006 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to [manufacture; or] 3.The word "manufacture" is a compound word of Latin origin derived from the words "manu," by hand and "facere," to do, to make, to form; but the meaning is not confined to that which is done by hand alone, but by machinery as well. (In Re : Tecopa Min. Etc., Co. - 110 Fed 120, 121). 4.The following passage in the Permanent Edition of Words and Phrases was referred to with approval in Delhi Cloth and General Mills. - AIR 1963 SC 791 at page 795 : 'Manufacture' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. 5.Our endeavour in the instant case would be to examine the activity of the appellant in the light of legislative intention as encompassed in the said definition. 6.In these appeals, the appellants have challenged the show cause notice issued by the Additional Collector of Central Excise, Calcutta-I. The said notice was issued on the ground that by the process of "welding" of electric resistant pipes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory backing and have been incorporated at the top of each Section/Chapter. (e) Special provision has been incorporated in respective Chapters in relation to the goods which poses problem in the matter of levy of excise duty. (f) General residuary Tariff Item 68 has been dispensed with and instead residuary items have been provided separately for each class of goods under each Chapter. (g) Interpretative rules have also been provided to serve as statutory guideline for interpreting the Tariff Schedule. (h) To preserve by and large the existing duty structure to the extent possible. (i) Government will have, for the first time, the power to raise duty through notification in certain circumstances but subject to limits provided in the proposed enactment. (j) To continue the present practice of granting exemption from duty under Rule 8 of the Central Excise Rules. 10.The other salient feature of the new Central Excise Tariff is that it adopts the principle of classifying all goods beginning with the raw materials and ending with the finished products within the same Chapter. Thus for the purpose of grouping various products, the New Tariff does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants under Tariff Item 7308.90 which is a Residuary Entry under Heading 73.08 pertaining to Structures. According to the appellants, the respondent Department has not discharged the burden of proving how the poles fall under Residuary Entry of Structures by mere process of welding. The burden to prove manufacture is always on the Revenue, as has been held by this Court in a series of cases and reiterated in a recently decided case Shyam Oil Cake Ltd. v. Collector of Central Excise, Jaipur reported in 2005 (1) SCC 264. 15.Reverting to the facts of this case, the relevant part of the show cause notice was sent by the respondent - Additional Collector of Central Excise, Calcutta to the appellants on 11-1-1989 reads as under :- "It appears that M/s. Hindustan Poles Corporation, a partnership firm having their office at 4A, Marcus Square, Calcutta-7 and works at 120A, Manicktola Main Road, Calcutta-54 (hereinafter referred to as the 'said firm') manufacturer of "Steel Tubular Poles" (hereinafter referred to as the "said goods") classifiable under Chapter Sub-heading No. 7308.90 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and which was classifiable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the joints at the entering points are swaged to give a circumferential grip with a surface inclination of 45 to shad water. Power is used in cutting the pipes of bigger length into smaller lengths. The resultant product, via, Pole thus emerges out as a new article involving process of manufacture within the meaning of Section 2(f) of the Act. 2.5.Even though the joints of the three sections of the Pole are welded during the course of making the joints and the resultant Pole is painted by using of paints and varnishes before delivery, nothing was mentioned about the using of electric arc welding used for welding the joints as also of paints and varnishes used for painting, although it was found on scrutiny of the Balance Sheet that a regular and recurring expenses is incurred by us for (a) cutting and welding, and (b) paints and varnishes for painting." In this reply, it is also mentioned that the process undertaken by the appellants was merely joining pipes of three different dias one with the other to desired length whereby no new goods and/or article other than pipes does emerge out inasmuch as even after such process of joining the pipes one with the other they do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e introduced Tariff Item 68 in the First Schedule to the Act covering "goods not elsewhere prescribed". Thereafter, the Superintendent of Central Excise took the view that the poles in question manufactured by the appellant were classifiable not under Item 26-AA but under Item 68 of the Central Excise Tariff and that, therefore, the appellant was liable to pay duty on all goods manufactured by it from 1-1-1975 till the date of the notice. 20.Tariff Item 26AA was introduced w.e.f. 24-4-1962 in the First Schedule to the Act. On 1-1-1975, the legislature introduced Tariff Item 68 in the First Schedule to the Act covering "goods not elsewhere prescribed". Even thereafter, the appellant filed classification lists showing the poles as falling under Item 26-AA and eligible for exemption under the relevant notification (which had taken the place of the notification of 1-3-1963). These classification lists were approved and the appellant continued to clear its goods without paying duty till August 1982. 21.According to the findings of this Court, the appellant was rightly classified under Item 26AA before 1-3-1975. The introduction of Item 68 makes a difference to the interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tariff item. The goods produced, therefore, do not cease to be iron and steel products or pipes and tubes of the description mentioned in Item 26-AA(iv). It may not be also correct to characterize them as a different commercial commodity. Some of them are called poles, an expression which means "a long slender piece of metal or wood commonly tapering and more or less rounded". Electric poles, being hollow ones, are not much different from pipes or tubes. The statement that they are commercially distinct commodities is merely based on their being called 'poles'. They are also available in the same market in which normally pipes and tubes are otherwise available. Neither the circumstance that certain processes are applied to the "mother" pipes or tubes nor the fact that, in order to identify the particular type of tube or pipe one needs, one may use different names is sufficient to treat the article as a commercially different commodity." 22.This Court came to the conclusion that the goods of the appellant in question were assessable to duty under Tariff Item 26AA. 23.In Bharat Forge and Press Industries v. CCE reported in (1990) 1 SCC 532, this Court observed that Tariff Item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.In Empire Industries Ltd. v. Union of India - AIR 1986 SC 662, it was observed that manufacture is complete as soon as by the application of one or more processes, the raw material undergoes some change. If a new substance is brought into existence or if a new or different article having a distinct name, character or use result from particular process, such process or processes would amount to manufacture. Whether in a particular case manufacture has resulted by process or not would depend on the facts and circumstances of the particular case. 28.A Constitution Bench of this Court in M/s. Ujagar Prints and Anr. v. Union of India Ors. - AIR 1989 SC 516 - followed the earlier decision in Empire Industries Ltd. v. Union of India (supra). While following the earlier judgment it was held that if there should come into existence a new article with distinct character and use as a result of the process, the essential condition justifying manufacture of good is satisfied. 29.This Court in Commissioner of Sales Tax, Orissa and Anr. v. Jagannath Cotton Company and Anr. - (1995) 5 SCC 527 - mentioned that manufacture in its ordinary connotation, signifies emergence of new and diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marble slabs amounted to manufacture for the purpose of Central Excise Act. This Court observed that after the activity is completed a marble would remain marble. Therefore, this activity did not attract the tax. 35.In Rajasthan SEB v. Associated Stone Industries reported in (2000) 6 SCC 141, this Court observed that the word 'manufacture' generally and in the ordinary parlance in the absence of its definition in the Act should be understood to mean bringing to existence a new and different article having a distinctive name, character or use after undergoing some transformation. When no new product as such comes into existence, there is no process of manufacture. Cutting and polishing stones into slabs is not a process of manufacture for the obvious and simple reason that no new and distinct commercial product came into existence as the end product still remained stone and thus its original identity continued. Ultimately, this Court held that it was also not possible to accept that excavation of stones and thereafter cutting and polishing them into slabs resulted in any manufacture of goods. 36.The question for consideration in Shyam Oil Cake Ltd.'s case (supra) was whether pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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