TMI Blog2024 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... on of crushing brings into existence a new product which has a different name, character and use. Process in this case is `manufacture' of lime stone chips which are excisable goods liable for duty under Chapter 25 of the Central Excise Tariff Act, 1985 at the rate of 12 per cent. The Collector, Central Excise, is right in levying duty on lime stone chips. From the above, it can be seen that any activity that amounts to manufacture of excisable goods is excluded from the definition. As discussed above, we arrive at a conclusion that the crushing of lumps into powder is an activity amounts to manufacture, when this being so, the manufacturing activity is excluded from the definition of Business Auxiliary Service, therefore, no service tax under the said head shall sustain. Time Limitation - HELD THAT:- Considering the nature of the goods, the demand for the extended period was set aside in various cases - reliance can be placed in the case of Hindustan Construction Company Limited [ 1996 (9) TMI 156 - CEGAT, COURT NO. II, NEW DELHI] dealing with the issue that whether the crushing of stones into stones of smaller size amounts to manufacture, classifiable under sub-heading 2505 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax under the head of Business Auxiliary Service. The contention of the Revenue is that the Notification No. 08/2005-ST is applicable only when the final product of the principal manufacturer is cleared on payment of duty, whereas in the case of principal manufacturer clearing the goods under chapter 25, the same is cleared at nil rate of duty. Accordingly, the demand was confirmed by the learned Commissioner (Appeals) in the impugned order. Therefore, the present appeals filed by the appellants. Since both the appeals involve same issue, they are taken up together for disposal. 2. Shri D.K. Trivedi, learned counsel appearing on behalf of the appellant, at the outset submits that the activity carried out by the appellant is amounting to manufacture in terms of Section 2(f) of Central Excise Act, 1944. The crushing of lumps is an activity of manufacture as held in various judgments. He placed reliance on the following judgments: Nilgiri Oil Allied Industries 2020 (43) GSTL 538 (Tri. Hyd.) Service Tax Appeal No. 28261 0f 2013 and 23806 of 2014 in common final order No. A/30309-30310/2021 dated 29.09.2021 S.N. Sunderson (Mineral) Ltd. 1995 (75) ELT 273 (MP) Eastern Mineral 1994 (7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er heading 2501, 2503 and 2505 is a manufacturing activity. Therefore, the appellant s activity is clearly a manufacturing activity which gets support from the followingdecisions: Niligiri Oil Allied Industries 2020 (43) GSTL 538 (Tri. Hyd.) 7. We find that in appellant s own case for subsequent period, the Learned Commissioner (Appeals) has gone into depth of the case and considered the order passed by the Tribunal in the case of Jayakrishna Flour Mills Pvt. Ltd. v. CCE, Madurai [2015 (37) S.T.R. 1079 (Tri. - Chen.)]. The said decision is based on the CBEC Circular No. 11/01/2012-CX.1, dated 9-7-2013 and thereafter this Tribunal came to the conclusion that the process, in question, would amount to manufacture and no service tax is leviable. Further, this Tribunal has held that crushing of chilli to make chilli powder does not amount to manufacture in the case of Sara Spices (supra), relying on the CEBC Circular dated 16-3-2000. 8. We are of the considered view that there are contrary decisions of this Tribunal, therefore it would be in the interest of justice to refer the matter to Larger Bench of this Tribunal to decide the following issue : (a) Whether the activity of crushing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders passed by the Commissioner (Appeals) dated August 26, 2013 impugned in Service Tax Appeal No. 28261 of 2013 and the order passed by the Commissioner (Appeals) dated October 22, 2014 that has been impugned in Service Tax Appeal No. 23806 of 2014 cannot be sustained and are set aside. The appeals are, accordingly, allowed. SN Sunderson(Minerals) Ltd. 1995 (75) ELT 273 (M.P.) 8.With effect from 28-2-1986, the definition of Section 2(f) of the Central Excise Tariff Act, 1985 has been substituted by Section 4 of the Act, which reads as under : (f) manufacture includes any process : (i) incidental or ancillary to the completion of manufactured product; (ii) which is specified in relation to any goods in the section or chapter notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture; and the word manufacture shall be construed accordingly and shall includes not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. Chapter Note 2 of Chapter 25 reads : 2. Headings, Nos. 25.01, 25.03 and 25.05 cover only products which have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has expressly made provision where the process undergone shall amount to manufacture wherever it is intended to extend the artificial definition. On the aforesaid view, we are of the opinion that Note 2 of Chapter 25 does not by artificial extension of the definition of the word `manufacture extend the process of crushing of lime stone to be a manufacturing process. 11. It is open for the revenue to establish that the process involved in the present case, i.e. crushing of lime stone, extracted from the mines, into lime stone chips is a process of manufacture. The question whether a particular process is a manufacture or not has to be judged and determined having regard to the facts and circumstances of each case and having regard to the well-known test laid down by the Supreme Court in a number of decisions. The Supreme Court in Union of India v. Delhi Cloth and General Mills Co. Ltd. [1977 (1) E.L.T. (J 199) (SC) = AIR 1963 SC 791], Empire Industries Ltd. v. Union of India [1985 (20) E.L.T. 179 (SC) = AIR 1986 SC 662), South Bihar Sugar Mills v. Union of India [1978 (2) E.L.T. (J 336) (SC) = AIR 1968 SC 922] has held that taxable event under the excise law is manufacture and liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... size by application of mechanical process, it is supplied to the buyer. The crushing operation is meant for the purpose of supply of particular size of lime stone chips, as per the order placed by the buyer. 14. The aforesaid facts establish that lime stone chips of a particular size are prepared as per the order placed by the buyer. The concept of manufacture has to be viewed considering the emergence of a new marketable product. The lime stone chips of specific size is a new product brought about by crushings of lime stone lumps. The operation of crushing brings into existence a new product which has a different name, character and use. Process in this case is `manufacture of lime stone chips which are excisable goods liable for duty under Chapter 25 of the Central Excise Tariff Act, 1985 at the rate of 12 per cent. The Collector, Central Excise, is right in levying duty on lime stone chips. 15. Now the question is whether the penalty imposed on the petitioners is in accordance with law. Under Rule 173Q of the Central Excise Rules, 1944, if any manufacturer, producer or licensee of a wharehouse, (a) removes any excisable goods in contravention of any of the provisions of the rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved in later decisions of the Supreme Court in Cement Marketing Co. of India v.Asstt. S.T. Commissioner [1980 (6) E.L.T. 295 (SC) = AIR 1980 SC 346], Union of India v. Bombay Tyre International [1983 (12) E.L.T. 869 (SC) = AIR 1984 SC 420] and Akbar BadrudinJiwani v. Collector of Customs, Bomaby[1990 (47) E.L.T. 161 (SC) = AIR 1990 SC 1579]. 17. Law on the subject is whether the crushing of the lime stone is a process of manufacture and resultent goods lime stone chip are excisable item under the Act was not settled in Madhya Pradesh. In a case decided by this Court under the M.P. General Sales Tax Act, 1959 in Bedaghat Mineral Industries v. Divisional Deputy Commissioner of Sales Tax, decided on 10th April 1987, a Division Bench of this Court has ruled, while considering Section 2(j) and 2(r)(ii) of the M.P. General Sales Tax Act, 1959 that dolamite lumps broken into chips and powder for convenience in use retain the same characteristics and qualities of dolamite lumps, therefore, there is no manufacture by crushing dolamite lumps into chips or powder. In S.A.I.L. v. Collector of Central Excise, C.E.G.A.T. had held that crushing of lime stone into lime powder does not amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tern Minerals 1994 (70) ELT 301 (Tri.) 4. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that the only point that arises for consideration in this case is whether crushing and grinding of lumps of minerals Diaspore, Pyrophylite into powder of required fineness amounts to manufacture within the meaning of Section 2(f) of the Central Excises and Salt Act. 5. It is seen from the records of the case that Diaspore is a high alumina mineral which is exclusively used for the manufacture of high alumina refractories and abrasives. Similarly Prophylite is used in ceramic industry and refractories. Both these minerals are generally marketed in the form of powder of the required grade and mesh obtained by crushing or grinding of lumps. It has been contended on behalf of the appellants that crushing of lumps of Diaspore and Pyrophylite into powder does not amount to manufacture in terms of Section 2(f) of the Act, since such processing no new product is formed and even after crushing and grinding the said mineral retains its original properties. According to the appellants both Diaspore and Prophylite are also marketed by them i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute manufacture. This decision in our view, cannot be of any assistance to appellants since in the case of Kher Stone Crushers v. District Industries Centre reported in 1992 (61) E.L.T. 586 a larger Bench of the Madhya Pradesh High Court while taking into account the judgment of the High Court in the case of Bheraghat Mineral Industries (supra) had held that the process of conversion of stones into gitties, ballast and metal in crushers gives rise to a new commercial commodity and hence, amounts to manufacture. 9. In support of their case the appellants have also placed reliance on the Tribunal s decision in the case of Pyrites, Phosphates and Chemicals Limited, Bihar v. Collector of Central Excise, Patna reported in 1983 (12) E.L.T. 537 wherein it was held that crushing and sieving of Pyrites is not a process of manufacture. In this case the main point that arose for consideration was whether the premises covered by the definition of Mine under the Mines Act, 1952 could be deemed as a factory under the Factories Act, 1948. Hence this decision also cannot be of any assistance to the appellants. 10. In view of the above discussion we rely on the decision of the Tribunal in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial by the user industry only after they have been powdered to the required fineness. It is only in powder form that the material becomes marketable to the user industry. There was a direct authority in the form of an order of this Tribunal on soap stone powder itself [1984 (18) E.L.T. 657 (Tribunal) - Oriental Talc Products Pvt. Ltd, Udaipur v. Collector of Central Excise, Jaipur]. It had been held in this order that grinding of soap stone into soap stone powder of required mesh amounted to manufacturing process. We put this authority to the appellants. They sought to distinguish it saying that the material under consideration before the Bench in that case was intended for talcum powder industry and was ground to a fine mesh size. However, we observe that this is not so. The soap stone powder covered by the earlier Bench order was used as a filler in various industries, such as paper, textiles, paints, ceramics, plastics etc. Whatever may be nature of the user industry, the point made by us still remains valid that the material becomes usable only after powdering. It is evident, therefore, that the name, character and use of soap stone lumps and soap stone powder are not the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. 1997 (89) ELT 123 (Tri.) 9. Tariff Heading 2505.00 covers inter alia mineral substances, not elsewhere specified including clay........ slate and stone. Stone is mentioned as an inclusive item. The question raised by the appellants that the stones do not have mineral contents and in fact should not contain them for purposes of concreting has no relevance. The material in question being stones which are included the Tariff Heading 2505.00 and the Chapter Note 2 of Chapter 25 referring to Heading 25.05 covering only products that have been washed, crushed, ground etc. there cannot be any challenge to the classification of stones and crushed stones under that sub-heading. There are, of course, several decisions on the question whether crushing or powdering of various substances would constitute manufacture on behalf of the appellants, reliance was placed on the Tribunal decision in Collector of Central Excise v. Mahavir Minerals Store Supply Co. - 1988 (38) E.L.T. 171 wherein it was held that crushing of Dolonite into powder and chips does not bring into existence a new commodity. This was, however, distinguished in Ajanta Marble Chemical Industries v. Collector of Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commissions agent, but does not include any activity that amounts to manufacture of excisable goods. From the above, it can be seen that any activity that amounts to manufacture of excisable goods is excluded from the definition. As discussed above, we arrive at a conclusion that the crushing of lumps into powder is an activity amounts to manufacture, when this being so, the manufacturing activity is excluded from the definition of Business Auxiliary Service, therefore, no service tax under the said head shall sustain. As regard, the limitation argued by the learned Counsel, we find that in the judgments cited above, thus considering the nature of the goods, the demand for the extended period was set aside. In this regard, we rely on the judgment in the case of Hindustan Construction Company Limited dealing with the issue that whether the crushing of stones into stones of smaller size amounts to man ..... X X X X Extracts X X X X X X X X Extracts X X X X
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