1987 (1) TMI 346 - AT - Central Excise

Cutting Steel Sheets into Designs = Manufacture: Tribunal Denies Duty Refund

The Tribunal held that the process of cutting Cold Rolled Grain Oriented Electrical Grade Steel Silicon Sheets into specific designs constituted ... Manufacture Issues Involved:1. Whether the process of cutting Cold Rolled Grain Oriented Electrical Grade Steel Silicon Sheets into specific designs amounts to 'manufacture' under Section 2(f) of the Central Excise Act.2. Whether the resultant products are liable to duty under Tariff Item 28A.3. Whether the appellants are entitled to a refund of the duty paid.Detailed Analysis:1. Whether the process of cutting Cold Rolled Grain Oriented Electrical Grade Steel Silicon Sheets into specific designs amounts to 'manufacture' under Section 2(f) of the Central Excise Act:The appellants contended that their process of cutting the imported steel sheets into specific designs did not constitute 'manufacture' as per Section 2(f) of the Central Excise Act. They argued that the process did not bring into existence a new product with a distinctive name, character, and use, and thus, should not be liable to excise duty. They relied on previous rulings such as Ajit India Pvt. Ltd. v. CCE and Aruna Industries v. CCE, where similar processes were not considered manufacturing.The Tribunal, however, emphasized that the determination of whether a process constitutes 'manufacture' must be based on the specific facts of each case. In this case, the appellants admitted that the cut laminations were used directly in transformers, indicating a change in the product's character. The Tribunal noted that the Cold Rolled Grain Oriented Electrical Grade Silicon Steel Sheets, after being cut into specific designs, were transformed into electrical stampings or laminations, which have distinct characteristics and uses in transformers.2. Whether the resultant products are liable to duty under Tariff Item 28A:Tariff Item 28A imposes excise duty on 'electrical stampings and laminations all sorts.' The Tribunal found that the cut laminations used in transformers fell under this category. The definition of 'stampings' included products cut out of a strip or sheet of metal intended for transformer lamination. The Tribunal referred to various definitions and concluded that the appellants' process of cutting the strips into specific designs amounted to creating electrical stampings, which are excisable under Tariff Item 28A.The Tribunal also cited previous judgments, such as the Rajasthan High Court's decision in State v. Sahachari Udhyog Mandir, which held that cutting and stitching a fabric into umbrella covers constituted manufacturing a new commercial commodity. Similarly, the Tribunal found that the appellants' cut laminations were a new product compared to the original steel sheets and were specifically designed for use in transformers.3. Whether the appellants are entitled to a refund of the duty paid:The appellants sought a refund of the duty paid, arguing that the Department had earlier communicated that the process did not amount to manufacture. However, the Tribunal noted that such communications do not operate as estoppel, and the Department is entitled to revise its stance based on the facts and circumstances of the case.Moreover, the Tribunal pointed out that the appellants had not contested the approval of the classification list, which classified the goods under Tariff Item 28A. As the case failed on the merits, the Tribunal did not find it necessary to delve into the question of entitlement to a refund.Conclusion:Upon careful consideration of all the facts, the Tribunal concluded that the process of cutting the steel sheets into specific designs amounted to manufacture, and the resultant products were excisable under Tariff Item 28A. Consequently, the appeal was rejected, and the appellants were not entitled to a refund of the duty paid.