2001 (2) TMI 138 - HC - Central Excise

Court rules corrugation of sheets as manufacture under Central Excise Act

The court dismissed the writ petition, ruling that the process of corrugation of metallic sheets constitutes manufacture under Section 2(f) of the Central ... Manufacture Issues Involved:1. Whether the process of corrugation of metallic sheets amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944.2. Whether the petitioner is liable to obtain a license and pay excise duty on the corrugated galvanised sheets.3. Whether the writ petition is maintainable given the pending show cause notice.Issue-wise Detailed Analysis:1. Whether the process of corrugation of metallic sheets amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944:The primary issue revolves around the interpretation of 'manufacture' under Section 2(f) of the Central Excise Act, 1944. The petitioner's argument, supported by previous judicial decisions and a Board's circular, was that galvanisation and corrugation do not amount to manufacture. The respondents, however, contended that corrugation transforms plain and galvanised sheets into a new product with distinct characteristics and marketability, thus constituting manufacture. The court referred to various precedents, including the Supreme Court's rulings in cases like Union of India v. Delhi Cloth Mills Co. Ltd., Empire Industries Ltd. v. Union of India, and M/s. Ujagar Prints v. Union of India, which established that a process resulting in a new and distinct commodity with different commercial identity amounts to manufacture. Applying these principles, the court concluded that the process of corrugation brings into existence a new product with a different commercial identity, marketability, and use, thereby constituting manufacture under Section 2(f).2. Whether the petitioner is liable to obtain a license and pay excise duty on the corrugated galvanised sheets:Given the court's determination that corrugation constitutes manufacture, the petitioner was required to obtain a license under Rule 174 of the Central Excise Rules, 1944, and pay the applicable excise duty. The court emphasized that the new product, resulting from the corrugation process, has a higher cost and different uses compared to the original metallic sheets, reinforcing the requirement for compliance with excise regulations.3. Whether the writ petition is maintainable given the pending show cause notice:The respondents argued that the writ petition should be dismissed as premature since no final order had been passed pursuant to the show cause notice issued during the pendency of the petition. The petitioner contended that the issuance of the show cause notice should not affect the maintainability of the writ petition. However, the court did not find this argument persuasive enough to alter its decision on the primary issue of whether corrugation amounts to manufacture.Conclusion:The court dismissed the writ petition, holding that the process of corrugation of metallic sheets amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944. Consequently, the petitioner is required to obtain the necessary license and pay excise duty on the corrugated galvanised sheets. The court's decision was based on established legal principles and the specific facts of the case, distinguishing it from other precedents cited by the petitioner.