TMI Blog2005 (6) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... nt product i.e. cold rolled steel strips was cleared on payment of duty and duly received by the assessee. These cold rolled steel strips were cut into smaller width and subjected to the processes of heat treatment, waxing and painting. The jurisdictional Asstt. Collector had approved the assessee's claim that the final product was non-excisable in view of the fact that the conversion of the steel strips into steel strappings was not considered as a process of manufacture. However, a show cause notice dated 8th April, 1997 came to be issued on the assessee under Rule 9(2) read with Section 11A demanding an amount of Rs. 1,13,82,247/- on the ground that the said conversion of steel strips into steel strappings was a process of manufacture, in respect of which the assessee failed to pay appropriate duty. The department felt that, prima facie, the steel strips merit classification under Chapter sub-heading 7308.90 as 'other articles of steel'. 2.1 The Collector of Central Excise, after considering the various aspects of the matter, found that decoiling, slitting, pin hole detecting, side trimming, deburring, cutting, welding, heating, painting, waxing, etc. did not alter the essenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... none of the members took into consideration the question as to whether the demand made by the Revenue was barred by limitation. In view of the amendment in Section 11A of the said Act, which was given retrospective effect from 27-12-85, the appellants had questioned the vires of the said provisions and the Supreme Court, for the reasons given in the judgment, held that Section 11A of the said Act as amended was a valid piece of legislation. Having answered the reference made to the Larger Bench, the Supreme Court was of the opinion that in the peculiar facts and circumstances of the case, it need not to go into the question as to whether the processes undertaken by the appellant would amount to manufacture or whether the classification of goods under sub-heading 7308.90 was correct, in view of the fact that the question as regard limitation and availability of Modvat has not been considered. As regards the question of classification, it was argued before the Supreme Court that ''box strappings" were classifiable under sub-heading 7211.31 as "strips" only and not under sub-heading 7308.90. Even after the processes were undertaken for the end product, the box strappings, remained as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment placed reliance on the decision of the Supreme Court in Collector of Central Excise, Meerut v. Kapri International (P) Ltd. [2002 (142) E.L.T. 10 (S.C.)], in which it was held that cutting the cotton fabrics from running length into small pieces brings into existence new commodities like bed sheets, bed spreads, table-cloths etc. which had a definite commercial identity in the market, and hence it was also dutiable under the very same tariff item. He also relied upon the decision of the Supreme Court in Laminated Packings (P) Ltd. v. CCE [1990 (49) E.L.T. 326 (S.C.)], in which it was held that by the process of lamination of kraft papers with Polyethylene, different goods came into being and the laminated kraft paper was distinct, separate and different identifiable goods known in the market as such from the kraft paper and, therefore, it was liable to Excise duty. It was held that the contention that duty paid kraft paper and the laminated kraft paper belong to the same tariff entry was not relevant because both of them were different identifiable goods known as such in the market. However, if duty had been paid on the kraft paper then the benefit of credit for the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and below, with milled, rolled, trimmed or sheared edges and supplied in coil or flattened coil (straight length) form but excludes hoop and skelp. He pointed out that the goods covered under Chapter 72 were described as products in the chapter notes and not as articles of iron and steel. He, therefore, submitted that there was no scope for treating "box strappings", which were cold rolled strips as any article falling under Chapter 73. Pointing out from sub-headings of Chapter 73, the nature of articles which were included thereunder, he argued that, these were all finished articles for independent use as such articles, unlike the cold rolled strips, which were a steel product, other than an article of the nature covered by Chapter 73. Relying upon the IS Standards, the learned Counsel pointed out that cold rolled steel strips" for which the standards were prescribed were known as "box strappings". The learned Counsel argued that "box strappings" were a type of a cold rolled strips and, therefore, they necessarily fall under sub-heading 7211.31 and cannot be classified under any other heading in view of the said specific entry. The learned Counsel also submitted that there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t known in the market with distinct character and use, and the product Aluminium strip remained sheets under Heading 7606. It was held that every transformation does not amount to manufacture and that, the process involved did not bring into existence a distinctly identifiable new product. The Tribunal also held that the Aluminium strips could not be classified under Chapter sub-heading 76.16, which was for other articles of Aluminium like nails, tacks, staples, screws, bolts, nuts, etc. 7. The show cause notice dated 8th April, 1987 was issued on the assessee for having removed from the factory at Rudraram, a quantity of 3384.824 MTs of tensile steel strappings (packaging system), valued at Rs. 7,58,81,650.36 during the period from 1-3-86 to 19-2-87 and also in respect of steel strappings weighing 342.579 MTs detained under a Panchnama on 19th February, 1987, valued at Rs. 38 Lakhs. According to the Revenue, all steel strappings were excisable/classifiable under Chapter sub-heading 7308.90. At the relevant time, such notice was to be issued within six months from the "relevant date" which would be the date on which the duty of excise was not levied or paid, except in cases falli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Tariff Item No. 26AA (iii), and there was no further duty liability. It is thus clear from the correspondence between the assessee and the revenue that the nature of the product and the processes involved for making "box strappings" were all known to the Department. This was, therefore, not a case of any fraud or wilful mis-statement or suppression of facts or contravention of the Act or the Rules with an intent to evade payment of duty. There was, therefore, no scope for invoking the extended period of limitation of five years for recovery of the duties not levied or not paid in respect of the said product. The show cause notice, which was issued on 8th April, 1987 was in respect of the period from 1-3-1986 to 19-2-1987 during which the Revenue found that 3384.825 MTs of tensile steel strips valued at Rs. 7,58,81,650.36 were removed and on 19th Feb., 1987, steel strappings weighing 342.579 MTs valued at Rs. 38 Lacs were detained. On the basis of the undertaking dated 23rd Feb., 1987, the detained goods were released. The period of six months that could be covered under the notice given on 8th April, 1987 would be from the relevant date to 19-2-87. The show cause notice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production process as is clear from the following excerpt from the said publication :- "Any initial impression of close similarity between general purpose steel strip and steel banding is superficial and is soon dispelled on closer examination. Steel strip is usually a semi-finished raw material used for consumption in a manufacturing process. In contrast, steel banding requires specialised production plant, the end product being purpose made to meet industry's diverse and varied needs. The main ingredient in these requirements is a product strong enough to do the job in hand." 8.3 The Indian Standard specifications for "cold rolled steel strips (box strapping)", (prescribed under the provisions of the Indian Standards institution (Certification Marks) Act and the Rules and Regulations made thereunder), which are based on the manufacturing and trade practices followed in the country and the field concerned, were prescribed for the said product initially in 1973. These standards covered "the requirements for two grades of cold rolled strips of nominal thickness from 0.35 to 1.2 mm and width between 9.5 and 40 mm., known as box strappings". This was extended to three grades, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are disclosed, also include heat treatment. Though individual processes like cutting marble may not amount to manufacture, when all the processes are cumulatively taken into consideration, and such multiple processes bring about a distinct product, they would amount to manufacture for the purpose of the Excise Tariff. Box strappings manufactured by the assessee are the products in which cold, rolled steel strips are used as a raw material and converted into a different product for the purpose of its use in the strapping market. The manufacturing process undertaken by the assessee results in cold rolled steel strips of a different variety possessing characteristics of box strappings which in their raw state, they did not possess. Strapping products can be distinguished by the type of material and certain physical and mechanical properties, in particular their minimum break strength, their tensile strength their elongation, and impact resistance. The minimum break strength designates the force (load) that can be applied to the strapping material without inducing fracture. The tensile strength corresponds to the maximum strength that can be sustained by a structure in tension. The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or cold rolled products. The cold rolled steel strips processed for their use as tensile steel strappings do not convert into any article of the nature covered by Chapter 73. Though notes of Chapter 72 shall, as far as they may, apply also to Chapter 73, the word "strips" does not occur in Chapter 73 in any of the sub-headings and, therefore, the meaning given to that expression in Chapter 72 has no application in the context of any of the articles covered under Chapter 73. On going through the description of goods covered under Chapter 73, they are : sheet piling of iron or steel, railway or tramway track construction material of iron or steel, tubes and pipes and blanks, therefor of iron or steel, rain water pipes and their fittings made from sheets, plates or universal plates of iron or steel, fittings for tubes and pipes (other than fittings for rain water pipes) of iron and steel, wire ropes and castings of iron or steel. The item "other articles of iron or steel" appears at Heading 73.08 and the articles covered by it are such as : bottom stools, chains, nails, rivets, sewing needles, springs, stoves, sanitaryware, etc. of iron and steel. Under this sub-heading, "Other artic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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