1997 (11) TMI 264 - AT - Central Excise

Tribunal rules attaching headers to sheets for zinc production is not manufacturing

The Tribunal allowed the appellant to raise additional legal points in a miscellaneous application regarding the process of supplying raw materials to job ... Appeal - Additional ground - Manufacture Issues:1. Permission to urge additional grounds in a miscellaneous application.2. Appeal against the order of Collector of Central Excise regarding the classification of lead and aluminium electrodes used in the manufacture of zinc.Analysis:1. The appellant sought permission to urge additional legal points related to the process of supplying raw materials to job workers for fabricating aluminium/lead electrodes. The Counsel argued that if the process amounted to manufacturing, the job workers should be treated as manufacturers. The request was allowed as the Department had no objection.2. The appeal challenged the Collector's order alleging the appellants as manufacturers of zinc, lead, and related products. The dispute centered around whether attaching headers to aluminium and lead sheets constituted manufacturing of electrodes used in the electrolysis process for zinc production.3. The Collector held that attaching headers to sheets transformed them into distinct electrodes, subject to duty. The appellants contended that this process did not create a new product with a different name, character, or use. They argued that duty liability should fall on job workers, not on them.4. The Tribunal agreed with the appellants, stating that the attachment of headers to sheets did not amount to manufacturing electrodes. The process was deemed necessary for the electrolysis process, and no new marketable product emerged, absolving the appellants of duty liability.5. The Tribunal referenced scientific definitions of electrodes to support its decision that the aluminium and lead sheets themselves acted as electrodes. Therefore, attaching headers did not create a new commodity, warranting duty payment.6. The Tribunal set aside the Collector's order, emphasizing that no duty was payable on the attached headers. The decision rendered discussions on Modvat benefits and Notification No. 217/86 unnecessary, as the fundamental issue of manufacturing electrodes was resolved.7. The Tribunal's ruling made the question of time limitation irrelevant, as the core issue of electrode manufacturing was conclusively decided in favor of the appellants.8. Consequently, the impugned order was overturned, and the appeal was accepted based on the Tribunal's findings regarding the non-manufacturing nature of attaching headers to aluminium and lead sheets for zinc production.