1988 (9) TMI 51 - SC - Central Excise

Assembling weighbridges held taxable as manufacture; both component and finished product liable to excise duty, appeal dismissed

SC held the appellant liable for excise duty on weighbridges, finding its assembling activity amounted to manufacture because it brought into existence a ... Liability to duty of manufacturing weighbridges - activity indisputably carried out by the appellant amounted to manufacture and what does it manufacture - whether the appellant M/s. Narne Tulaman Manufacturers Pvt. Ltd. manufactured weighbridges and as such was liable to duty under the Act. - HELD THAT:- In view of the well settled principles, the excisable goods are manufactured by the appellant. Section 2(f) of the Act provides an inclusive definition and states that the word 'manufacture' includes any process incidental or ancillary to the completion of a manufactured product. So any process by which an object becomes new commercial goods, including any process incidental or ancillary to the completion would be manufacture. Manufacture means bringing into existence new goods. The appellant's contention before the Tribunal was that it was only preparing a part and that part is dutiable as a separate part. The appellant, however, did the work of assembling. As a result of the work of the appellant a new product known in the market and known under the excise item 'weighbridge' comes into being. The appellant will become a manufacturer of that product and as such liable to duty. That is precisely what the Tribunal found on the facts of the case. The appellant seems to have been obsessed by the idea that as a part of machine is liable to duty then the whole end product should not be dutiable as separate excise goods. That is mistake, a part may be goods as known in the excise laws and may be dutiable. The appellant in this case claims to have manufactured only the indicator system. If the indicator system is a separate part and a duty had been paid on it and if the rules so provide then the appellant may be entitled to abatement under the rules. But if the end product is a separate product which comes into being as a result of the endeavour and activity of the appellant then the appellant must be held to have manufactured the said item. When parts and the end product are separately dutiable -both are taxable. Thus, the appellant's case that it is liable only for the component part and not the end product cannot be entertained. The Tribunal was, therefore, right in the view it took. These appeals have no merit and are accordingly dismissed. Issues involved: Appeals under Section 35L of the Central Excises and Salt Act, 1944 regarding the liability to duty of manufacturing weighbridges.Summary:Issue 1: Manufacturing of Weighbridges The question before the Tribunal was whether the appellant, M/s. Narne Tulaman Manufacturers Pvt. Ltd., manufactured weighbridges and was liable to duty under the Act. The appellant claimed to have only manufactured the indicator system of the weighbridges, while the platform was obtained from others and the load cells were imported. The Tribunal found that the appellant brought the three components together, fitted and assembled them to create a new weighbridge, which was not excised before. The Tribunal held that as long as a weighbridge is made and completed, duty has to be paid on the complete machine. The definition of 'manufacture' under Section 2(f) of the Act includes any process incidental to the completion of a manufactured product, and the activity of assembling the components to create a new commercial product constitutes manufacture. The Tribunal's decision was based on established principles that a new and different article must emerge with a distinctive name, character, or use.Issue 2: Liability for End Product The appellant contended that it was only preparing a part of the weighbridge, which should be dutiable separately. However, the appellant's activity of assembling the components resulted in the creation of a new product known in the market as a weighbridge, which made the appellant liable to duty as a manufacturer of the end product. The Tribunal rejected the appellant's argument that if a part is dutiable, the entire end product should not be separately taxable. It was clarified that when both parts and the end product are separately dutiable, both are taxable. Therefore, the appellant's claim that it is only liable for the component part and not the end product was not accepted by the Tribunal.Conclusion: The Tribunal found that the appellant was liable for manufacturing the complete weighbridge and upheld the duty imposition. The appeals were dismissed, with a clarification that the order would not prejudice the appellant's right to claim abatement if entitled under the rules.