2007 (5) TMI 2 - SC - Central Excise

Aluminium Billets Production Qualifies as 'Manufacture' under Central Excise Act

COMMISSIONER OF C. EX., JAIPUR Versus MAHAVIR ALUMINIUM LTD.

The Supreme Court held that the conversion of Aluminium Ingots into Aluminium Billets constitutes 'manufacture' under the Central Excise Act, 1944. The ... Manufacture – Appellants engage in the process of conversion of Aluminium Billets during the intermediate by adding other alloy – After considering the facts authority decided that appellants liable to pay excise duty Issues:1. Whether the process of converting Aluminium Ingots into Aluminium Billets amounts to 'manufacture' under the Central Excise Act, 1944Rs.2. Whether the imposition of Central Excise Duty on the production of Aluminium Billets is justifiedRs.Detailed Analysis:Issue 1:The case involved a dispute regarding whether the conversion of Aluminium Ingots into Aluminium Billets by re-melting and adding other alloys constitutes 'manufacture' under Section 2(f) of the Central Excise Act, 1944. The Commissioner of Central Excise held that the production of Aluminium Billets from Ingots and other materials amounted to 'manufacture' as the Billets were distinct commodities with separate marketability. The Commissioner noted that Billets emerged as a result of melting and had different characteristics and uses compared to Ingots. The Commissioner concluded that the process of converting Ingots into Billets fell within the definition of 'manufacture' under the Act.Issue 2:The dispute also revolved around the imposition of Central Excise Duty on the production of Aluminium Billets. The Custom, Excise and Gold (Control) Appellate Tribunal (CEGAT) initially set aside the Commissioner's order, stating that the conversion of Ingots into Round Ingots or Billets did not amount to 'manufacture' as the taxable commodity remained the same in a different form. However, the Supreme Court, upon hearing arguments from both parties, disagreed with CEGAT's decision. The Court held that the production of Billets constituted 'manufacture' as per the Act. The Court emphasized that the Billets were commercially distinct commodities with their own marketability, justifying the imposition of Central Excise Duty. The Court referred to precedents and legal definitions to support its decision, ultimately allowing the appeal and restoring the Commissioner's order.In conclusion, the Supreme Court ruled in favor of considering the conversion of Aluminium Ingots into Aluminium Billets as 'manufacture' under the Central Excise Act, 1944, and upheld the imposition of Central Excise Duty on the production of Billets. The judgment highlighted the distinct marketability of Billets as separate commodities, supporting the decision to charge Excise Duty.