TMI Blog1991 (9) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 35L of the Central Excises and Salt Act, 1944 involve the interpretation of the Notification No. 179/77-C.E., dated 18-6-1977. The Notification read thus :- "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts all goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) in or in relation to the manufacture of which no process is ordinarily carried on with the aid of power, from whole of the duty of excise leviable thereon." Tariff Item 68 during the relevant period read :- "All other goods, not elsewhere specified, manufactured in a factory but excluding...." 2. M/s. Rajasthan State Chemical Works, the respondents in Civil Appeal Nos. 3593-94 of 1989, are manufacturers of crude sodium sulphate. In the process of manufacture of common salt from brine, in the salt pans in which the process of evaporation takes place some quantities of sodium sulphate present in the brine also crystallise and settle at the bottom as crust. The sodium sulphate is thus obtained as a bye-product. For the purpose of the manufacture, brine is pumped into sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment has exempted all goods falling under Item No. 68 of the First Schedule to the Act in or in relation to the manufacture of which no process is ordinarily carried on with the aid of power from the whole of the duty of excise leviable thereon. The exemption under this notification is available only when the goods are manufactured without the aid of power at any stage of the process. Where manufacture involves series of processes and if anyone of such processes is carried on with the aid of power, the case is taken out of the purview of the notification. 9. We have to consider what activity amounts to process in or in relation to manufacture of goods for the application of the notification. The word `manufacture' has been defined in Section 2(f) of the Central Excises and Salt Act, 1944, thus :- "2(f). `Manufacture' includes any process - incidental or ancillary to the completion of a manufactured(i) product; and (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." 10. Clause (f) gives an inclusive definition of the term `manufacture'. According to the dicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s "a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result." The activity contemplated by the definition is perfectly general requiring only the continuous or quick succession. It is not one of the requisites that the activity should involve some operation on some material in order to its conversion to some particular stage. There is nothing in the natural meaning of the word `process' to exclude its application to handling. There may be a process which consists only in handling and there may be a process which involves no handling or not merely handling but use or also use. It may be a process involving the handling of the material and it need not be a process involving the use of material. The activity may be subordinate but one in relation to the further process of manufacture. 14. In J.K. Cotton Mills v. S.T. Officer, (1965) 1 S.C.R. 900, this Court in construing the expression `in the manufacture of goods' held thus :- "But there is no warrant for limiting the meaning of the expression `in the manufacture of goods' to the process of production of goods only. The expression `in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture" in the same sense of bringing into existence of a new substance known to the market, liable to duty. The sole purpose of inserting this definition is to make it clear that at certain places in the Act the word `manufacture' has been used to mean a process incidental to the manufacture of the article. Thus in the very item under which the excise duty is claimed in these cases, we find the words : "in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power". The definition of `manufacture' as in Section 2(f) puts it beyond any possibility of controversy that if power is used for any of the numerous processes that are required to turn the raw material into a finished article known to the market the clause will be applicable; and an argument that power is not used in the whole process of manufacture using the word in its ordinary sense, will not be available. It is only with this limited purpose that the legislature, in our opinion, inserted this definition of the word `manufacture' in the definition section and not with a view to make the mere "processing" of goods as liable to excise duty." 16. A process is a manufacturing pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions manufacturing process is impossible to be completed. Therefore, if power is used in anyone of these operations or anyone of the operations is carried on with the aid of power, it is a case where in or in relation to the manufacture the process is carried on with the aid of power. 18. Learned Counsel for the appellant relying on the decision of the Gujarat High Court in Nirma Chemical Works Ors. v. Union of India Ors., 1981 (8) E.L.T. 617 (Guj.), submitted that process means an operation which brings about some change in the raw material. That in the present case, the operation of putting the raw materials, namely, coke and lime stone on the kiln head does not bring about any change in the raw material but the raw materials remain in the same shape as they were when they were brought in the truck and were dumped separately on the ground and, therefore, this operation can be termed only `transportation' and cannot be called a `process'. The Gujarat High Court in Nirma Chemical Works (supra) said :- "It must be made clear that it is only at the stage of transferring liquid raw materials from the motor tanker to the storage tank that power is used and at no subsequent stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting the word `process' has assumed that `process' is synonymous to `processing' and has drawn support from the observations of this court in Chowgule Co. Pvt. Ltd. v. Union of India, A.I.R. 1981 SC 1014. We are afraid, the observations had not been properly understood or applied in drawing inference that process when used in relation to manufacture must be one that produces a change in the commodity. It has been made clear in Dy. Commissioner, Sales Tax, Ernakulam v. Pio Food Packers, A.I.R. 1980 SC 1227 = 1980 (6) E.L.T. 343 (SC) that :- "Commonly manufacture is the end-result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place." 20. It h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at manufacture of fireworks requires cutting of steel wires and the treatment of papers and, therefore, it is a process for manufacture of goods in question. The notification purports to allow exemption from duty only when in relation to the manufacture of goods no process is ordinarily carried on with the aid of power. It was observed that cutting of steel wires or the treatment of the papers is a process for the manufacture of goods in question. 22. We are, therefore, of the view that if any operation in the course of manufacture is so integrally connected with the further operations which result in the emergence of manufactured goods and such operation is carried on with the aid of power, the process in or in relation to the manufacture must be deemed to be one carried on with the aid of power. In this view of the matter, we are unable to accept the contention that since the pumping of the brine into the salt pans or the lifting of coke and lime stone with the aid of power does not bring about any change in the raw material, the case is not taken out of the notification. The exemption under the Notification is not available in these cases. Accordingly, we allow these appeals. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
