TMI Blog1988 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... cludes any process incidental or ancillary to the completion of a manufactured product." 4. The aluminium collapsible tubes and rigid cans manufactured by the petitioner No. 1 were chargeable to duty under the Central Excises Act under Tariff Item 27 of I Schedule to the Act. This item as it stood prior to 17-6-80 reads as : '27. Aluminium.- (f) containers made of aluminium. 5. Both Section 2(f) and Item 27 underwent change by Finance (No. 2) Act of 1980. 6. In the definition Section, 'manufacture' after sub-clause (vii), the following sub-clause was inserted, viz., "(viii) in relation to aluminium, includes lacquering or printing or both of plain containers." 7. Corresponding change in Tariff Item 27 in the I Schedule to the Act was also substituted and read thus :- 27. "Aluminium" and products thereof- "Aluminium" shall include any alloy in which aluminium predominates by weight over each of the other metals." (11) Containers, plain, lacquered or printed or lacquered and printed." 8. In the Writ Petition the petitioners have challenged the constitutional validity of the amended Section 2(f) and Tariff Item No. 27 in the First Schedule referred to above as am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inting or lacquering, is also a manufacture for the purpose of levy of excise duty by virtue of the expanded definition' of the term, after it was amended in the year 1980. Therefore, it is contended that the value of the final product namely, aluminium tubes lacquered and printed, which passes out of the gates of the manufacturer, should be taken as the value of excisable goods. 14. Both the learned Counsel for the petitioner as well as the Standing Counsel for the Department are relying upon the decision of the Supreme Court in Empire Industries Ltd. v. Union of India - [1985 (20) E.L.T. 179 (S.C.) = 1986 S.C. 662]. 15. Para 36 of the said decision is referred to by the petitioners, and the ratio of the decision on facts, is sought to be applied to the fact of this case, by the Department. It is, therefore, necessary to refer to the facts of the said case and the ratio as applicable to this case. 16. In Empire Industry's case, the Supreme Court considered the validity of the definition of "manufacture" as amended by the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980 (Act 6 of 1980). 17. The amended provisions which were impugned before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her contention of the petitioner was that it received fully manufactured man-made fabrics and cotton fabrics from its customers only for the purpose of carrying out one or more of the aforesaid processes on the cotton fabrics, as per the requirements and instructions of the customers and after the necessary processes were carried out, the same were returned to the customers. The petitioner company contended that it merely collected from its customers charges only for job work of processing done by it and further it had no proprietary interest in the fabric either before or after the same was processed. The petitioner-company was required to file classification list for approval of the concerned excise authorities in respect of the processed fabrics referred to above. The demand made by the Central Excise authorities to pay additional excise duty on the processed fabrics under the new Tariff Item 19-1(b) was challenged by the petitioner-company before the Supreme Court under Article 32. 26. The main contentions before the Supreme Court were : (i) that the processes of bleaching, dyeing, printing, etc., carried out by the petitioner-company as job works, could not properly be des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion that the process of bleaching, dyeing and printing etymologically also means, "manufacturing process". 30. The argument that it was a tax on the activity, like processing and the charging section did not envisage any levy of duty on such activity, was rejected by the Supreme Court observing that the argument proceeded entirety on a mis conception. Charging Section 3 of the Act was then referred to and in view of their finding recorded earlier that the process of bleaching, dyeing, etc., also meant 'manufacturing process', the levy was upheld as one falling under the charging section. 31. The Supreme Court, however, granted relief to the petitioners insofar as the duty that the grey fabrics had already suffered in the hands of its manufacturers. The ratio of the decision and the principle laid down contained in paragraph 52 of the judgment (Empire Industryies Ltd.), is reproduced :- "When the textile fabrics are subjected to the processes like bleaching, dyeing and printing etc., by independent processes, whether on their own account or on job-charges basis, the value for the purposes of assessment under Section 4 of the Central Excise Act will not be the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Extrusion Process Pvt. Ltd. v. N.R. Jadav, Superintendent of Central Excise [79 E.L.T. (J) 380], and the three decisions of the three learned Single Judges of the Bombay High Court in : (i) Metal Box Company's case - [Misc. Petition No. 511/73 - disposed of on 24th July 1979]; (ii) Metal Box India Ltd. v. Union of India Others - [W.P. No. 998/81 - disposed of on 1-7-1987, 1987 (31) E.L.T. 696 (Bom.)] and (iii) Extrusions Pvt. Ltd. v. M.C. Thakur and Union of India - [W.P. No. 1539/81 - disposed of on 23-7-1987]. 37. Reliance is also placed on paragraph 36 in Empire Industry's case, in which a reference is made to the decision of the Gujarat High Court in Extrusion Pvt. Ltd. v. N.R. Jadhav - 1979 E.L.T. (J 380) and it is submitted that, by implication, the said decision is approved by the Supreme Court. 38. Before adverting to the contentions of the petitioner, it would be necessary to deal with each one of the cases cited by the learned Counsel. 39. In Metal Box Company's case - (Misc. Petition No. 511/73) - an attempt made by the Department to include the cost of printing and lacquering, etc., in the value of the excisable goods, namely the extruded pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India Ors. (Mis. Petn. No. 511/73) in support of his conclusion taken, to allow the writ petition and strike down the relevant provisions impugned in the writ petition. 46. The important point to be noted to distinguish those two decisions is, that in both the cases the provisions of the Central Excise Act before it was amended by Finance (No. 2) Act of 1980 had been challenged and therefore, they have no relevance in view of the amended provisions. 47. It is significant to note that under the amended Section 2(f), the expression, "manufacture" underwent a marked change which means and includes any process incidental or ancillary to the completion of a manufactured product, and, Item (v) of Section 2(f) refers to goods comprised in Item No. 19-1 of First Schedule, viz., cotton fabrics includes cotton fabrics, bleaching, printing and dyeing, and Item (viii) in relation to aluminium, includes, lacquering and printing or both of plain containers. 48. It is also stated by Shri Shivappa for the Department that the said judgment of Justice Suresh has since been stayed in a Writ Appeal filed by the Department before the High Court of Bombay. 49. The observations made and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, the question is, why not the value of lacquered and printed tubes be adopted for purposes of levy in this case? 54. The object of the extended definition of the term, "manufacture" is to include lacquering or printing, or both. Petitioners are the manufacturers of aluminium collapsible tubes and supply in bulk quantities, lacquered and printed tubes to their customers, depending upon and to meet the requirements of the various manufacturers of products like pharmaceuticals, cosmetics, etc. To quote from the very wordings used by their Lordships in the said case (See: para 44), the process of lacquering and printing which is incorporated in the impugned provisions, are not alien or foreign to the concept of "manufacture". The process of lacquering and printing has nexus with the manufacture of the item, particularly as the process was intended to give a finishing touch rendering the product marketable and as a new and distinct article. 55. I am, therefore, of the view that the excisable goods on the facts of this case, should be the lacquered and printed tubes, and not plain collapsible tubes and the intrinsic value of the goods should be the increased value of the plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1987 (27) E.L.T. 567 (S.C.) = 167 ITR 904] differed from the view taken in Empire Industry's case and referred the said case to a Larger Bench. While doing so, their Lordships expressed that it would be open to the Larger Bench to consider not only the question of determination of the assessable value, but also the principal question, whether processing of grey-fabric by a processor on job-work basis, constitute "manufacture" decided in favour of the Revenue in Empire Industry's case, was also left open to be decided by the Larger Bench. 61. The petitioners in Empire Industry's case had independent processing units and some difficulty was felt by the later Bench in evolving the correct method of determining the assessable value of the processed fabric in the hands of the processor, who does the job-work on the grey-cloth supplied by the manufacturer or trader. 62. Re: the Constitutionality of the provisions of Section 2(f) and Tariff Item 27 in the I Schedule to the Central Excises and Salt Act, 1944, as amended by Finance (No. 2) Act of 1980, and also Note No. 2 of Chapter 83 and Tariff Item 8312.11 in the Schedule to the Central Excise Tariff Act, 1985, considerable argument ..... X X X X Extracts X X X X X X X X Extracts X X X X
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