1986 (5) TMI 169 - AT - Central Excise

Department's appeals dismissed, appeal No. 322/85-B1 allowed. Activities not manufacturing, site not factory, structures not goods.

The Department's appeals were dismissed, and appeal No. 322/85-B1 was allowed. The Tribunal determined that the activities did not constitute manufacture ... Manufacturer Issues Involved:1. Whether there was a manufacture u/s 2(f) of the Central Excises and Salt Act, 1944Rs.2. Whether the place where 'manufacture' had taken place is a factory within the meaning of Section 2(m) of the Factories ActRs.3. Whether the assessee firms have manufactured 'goods' to attract Central Excise dutyRs.Summary:1. Manufacture u/s 2(f) of the Central Excises and Salt Act, 1944:The position is well-settled by several judicial pronouncements that manufacture implies a change, but every change is not manufacture excisable to duty. The manufactured product should be known as such in the commercial community. The burden of establishing that a new commodity commercially known as a distinct and separate commodity having its own character, name, and use is on the Department. The Tribunal analyzed the facts and found that the processes of cutting, drilling, and welding did not completely change the identity of the individual members nor a new commercial commodity with a distinct name, character, and use. The raw materials underwent a change, but such activity was not sufficient to hold that a commercially different and distinct commodity had emerged. The fabrication activity did not amount to manufacture.2. Factory within the meaning of Section 2(m) of the Factories Act:The explanation to Notification No. 46/81 indicates that the expression 'factory' has the meaning assigned to it in clause (m) of Section 2 of the Factories Act. The respondents erected the structures on the site allotted to them by VSP, and it was argued that an open yard could never be a factory. The Tribunal held that the assessees were only erecting a construction and fabricating the materials on the spot. The workers were considered as birds of passage and not as workers working within a factory. Therefore, even assuming that there was a manufacture, the goods were not manufactured in a factory under Section 2(m) of the Factories Act.3. Manufacture of 'goods' to attract Central Excise duty:The term 'goods' has not been defined under the Central Excise Act. The Tribunal considered that the pillars were first erected, and the super-structures were fabricated thereon. The constructions were such that there could be no pillars in the center or within the shed. The entire weight had to be borne by the beams and trusses. The fabrications or fixtures could not be considered as movable properties and were not 'goods' to attract Central Excise duty.Conclusion:The appeals by the Department were dismissed, and the appeal No. 322/85-B1 was allowed. The Tribunal found that the nature of the work carried on by the assessees did not amount to manufacture, the site was not a factory under the Factories Act, and the fabricated structures were not 'goods' to attract Central Excise duty.