TMI Blog1987 (8) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... the customers. These 'shapes and sections' are subjected to further processes of polishing and drilling, to make them suitable and identifiable as parts of machinery. Mostly the products are sold after the processes of machining, polishing and drilling are done but, sometimes, these are also sold without such processes, if desired by the customers. According to the appellants, the dispute in this appeal is only with regard to flanges and no other product. The claim of the appellants is that flanges are classifiable for payment of excise duty only under Tariff Item 26AA(ia) and under no other Tariff Item. Tariff Item 26 AA reads as under : "26 AA: Iron or steel products are as follows namely :- (i) Semi-finished steel cutting blooms, billets, slabs and sheet bars, tin bars and hoe bars. (ia) bars, rods, coils, wires, joists (girders, angles other than slotted angles, channels other than slotted channels), tees, beams, zeds, through piling and all other rolled, forged, extruded shapes and sections, not otherwise specified; (ii) plates and sheets (including uncoated plates and sheets intended for tinning and forms, such as ridges, channels other than slotted channels, rain wat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem 68 in addition to duty liability under Tariff Item 26AA(ia) at the initial forging stage. 6. The order of Shri Tyal was upheld in appeal by Appellate Collector and by Government of India in the revision petition. While dismissing the revision petition, the Central Government adopted the reasoning given in order No. 176 of 1979, dated 3rd March, 1979 in the case of M/s. Guest Keen Williams Limited, It was observed : "Government observe that all rolled, forged or extruded shapes and sections, not otherwise specified are excisable under sub-item (ia) of Item 26AA of the C.E.T. In other words, if the forged products are specified under other Tariff Items, namely, from Item 1 to Item 67, these alone would go outside the scope of sub-item (ia) of Item 26AA. Parts of motor vehicles etc., would come in this category. However, if such products are not specifically covered under Items 1 to 67, these would necessarily be classifiable under sub-item (ia) of Item 26AA. In respect of those forged shapes and sections which may be subsequently used as components for machinery, classification has necessarily to be under sub-item (ia) of Item 26 AA. If such products are processed further t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the entry in Tariff Schedule under which any particular commodity falls, but, if in so doing, these authorities adopt a construction, which no reasonable person could adopt, that is if the construction is perverse, then alone the Court can exercise its writ jurisdiction and is competent to interfere. The Court dealing with the petitions under Article 226 of the Constitution of India is not sitting in appeal over the decisions of the Excise authorities. It is also well settled that if two constructions are possible, and the authorities adopt one which is in favour of the revenue, the Court has no jurisdiction to interfere merely because the other interpretation favourable to petitioner appeals to the Court as the better one to adopt : (See Collector of Customs v. Ganga Shetty, AIR 1963 S.C. 1319, Girdhari Lal v. Union of India, AIR 1964 S.C. 1949, and V.V. Iyer v. Jagjit Singh, AIR 1973 S.C. 194). 10. In the present case, the Assistant Collector of Central Excise, Appellate Collector in appeal, and the Central Government in revision petition, have all come to the conclusion that the shapes and sections which are processed further to make them suitable and identifiable as parts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariff Item 68. The principal question is whether the products of the appellant company fall under any other Tariff Item Nos. 1 to 67. It is not the case of any of the parties before us that the flanges fall under any Tariff Item other than Tariff Item 26AA(ia) or 68. The applicability of any other Tariff Item is, therefore, eliminated for the purposes of decision of this appeal. The case of the appellants is that flanges fall only under Tariff Item 26AA(ia). On the other hand, the case of the respondents, is that flanges are liable to be classified as 'forged shapes and sections' under Item No. 26AA(ia) before the process of machining, polishing and drilling and after these processes are undertaken, the flanges cease to be forged 'shapes and sections' and become identifiable parts of machinery liable to be again classified under Item 68, in addition to classification under Item 26AA(ia). 14. The contention of Mr. Watel is that flanges even after processes of machining, polishing and drilling remain the forged steel products and, therefore Item 26AA(ia) is applicable. The significant words in this Tariff Item are "all other rolled forged extruded 'shapes and sections' not otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture which is liable to excise duty must bring into existence a new substance known to the market and that to become goods an article must be something which can ordinarily come to the market to be bought and sold and further that mere process is not manufacture. Again, in Allenberry Engineering Private Limited v. Ramakrishna Dalmia Ors., (1973) 2 S.C.R 257, the Supreme Court reiterated that the word 'manufacture' according to its dictionary meaning is the making of articles or material (now on large scale) by physical labour or mechanical power. In this case, again, a reference was made to the definition of 'manufacture' according to Permanent Edition of Words and Phrases, Volume 26. The judgment of South Bihar Sugar Mills was cited in Allen-berry's case (supra) with approval. There can be no dispute with above propositions but the real dispute is about its applicability. 17. Whether transformation has taken place or not and whether a new and different article, having distinct name, character or use, has emerged or not is essentially a question of fact depending upon the facts and circumstances of each case. Whether execution of a particular kind of work, results in manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am v. Pio Food Packers, 1980 E.L.T. 343 (S.C.). In that case, all that was held was that where pineapple fruit was processed into the pineapple slices for the purposes of being sold in sealed cans, there is no consumption of the original pineapple food for the purpose of manufacture though there may be some processing and the commodity continues to possess its original identity. 21. In Chowgule Co. Pvt. Ltd. and another v. Union of India and others, (1981) 1 S.C.C. 65, it was held that the blending of different qualities of ore processing different chemical and physical composition so as to produce ore of the contractual specifications cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new and distinct commodity from the ore of different specifications blended together. What is produced as a result of blending is commercially the same article, namely, ore, though with different specifications than the ore which is blended and hence it cannot be said that any process of manufacture is involved in blending of ore. It is on the same reasoning that in P.C. Cheriyan v. Miss. Barfi Devi, 1979 E.L.T. (593), it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voluminous evidence in that case, the Supreme Court on facts, came to the conclusion that V.P. Latex was a component of SBR which is admittedly classified under rubber raw. The Supreme Court in this case was of the view that in the state of evidence before the revisional authority, no reasonable person could come to the conclusion that V.P. Latex would not come under rubber raw. This judgment again affords no assistance to the appellants inasmuch as it is clear, in the present case, that the goods which are being cleared are treated as machinery parts by the people in trade. In other words, the goods in question in commercial parlance are machinery parts and not forged shapes and Section. 25. Reference may also be made to the case Commissioner of Sales Tax, U.P., Lucknow v. Harbilas Rai and Sons, (1968) 21 S.T.C. 17. In that case, the Supreme Court held that the word 'manufacture' has various shades of meaning and in the context of sales tax legislation if the goods to which some labour is applied remain essentially the same commercial article, it cannot be said that the final product is the result of manufacture. The assessee in that case was a dealer in pig bristles. pig bristl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively of the Excise Tariff and that machining and polishing of these products would not make them liable to pay duty again under Item 68. The said judgment, however, has no applicability as the facts therein were entirely different. In that case, the Calcutta High Court came to the conclusion on facts that castings at that stage are generally not saleable in the market and to make them saleable finishing polishing work has to be undergone. Same was the position of cast steel rolls. However, the finding was that the customers had to convert the said castings into machine parts as per their own requirement by employing machining/turning/processing like groove cutting and grinding etc. The castings were held, at that stage, not to be finished castings. The products, it was held by the learned Judge of the Calcutta High Court, are never known, dealt with or regarded in the market as finished machine parts and for making machine parts out of the said cast iron rolls and cast steel rolls manufactured at and cleared from the factory of the petitioner therein, the customers concerned had to undertake various processes such as groove cutting, grinding, combering etc. 28. In Coromandal Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mysore 237). The Supreme Court has affirmed the view of the Mysore High Court [See: Union of India v. State of Mysore, AIR 1977 S.C. 127 = 1977 E.L.T. (T 26) S.C.]. As flanges are not shapes and sections, Tariff Item 26AA(ia) would not be attracted after flanges are manufactured from forged shapes and sections. 31. For interpreting Item 26AA(ia), the principles of ejusdem generis can also be applied. Accordingly, unspecified goods can come within the purview of this item only when such goods are of the same class as specified ones (See: Mysore case supra). However, Counsel for the appellants urged that the principles of ejusdem generis have no applicability and reliance was placed on three judgments of the Supreme Court reported in Tribhuvan Prakash v. Union of India, AIR 1970 S.C. 540, Amar Chandra Chakraborty v. Collector of Excise, AIR 1972 S.C. 1863, and Mangalore Electric Supply Company Limited v. C.l.T. West Bengal, Calcutta, AIR 1978 S.C. 1272, for the proposition that to invoke the application of ejusdem generis rule, there must be a distinct genus or category and that the specific words must apply not to different objects of widely different character but to something wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and drilling for the specific purposes of manufacturing machine parts. After the aforesaid process, the flanges cease to be shapes and sections and by these process transformation or substantial change takes place and shapes and sections go out of the purview of Tariff Item 26AA(ia). All the authorities of Central Excise have rightly come to the conclusion that the goods in question are identifiable as machine parts. It is not possible to hold that the conclusion of the authorities is perverse. The forged products which undergo the further process like machining, polishing and drilling holes to make them identifiable as machine parts leave the factory gate in a form known to the commercial community as machinery parts. 34. The learned single Judge rightly held that the transformation takes place by further process of manufacture and as such the appellants are liable to pay duty of Central Excise under Tariff Item 68 in addition to duty under Item 26AA(ia) at the stage of forging. The Counsel for the appellant, however, stated that Central Excise duty is not payable under Tariff Item 26AA(ia) on account of exemption notification issued by Government of India from time to time. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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