TaxTMI 
TaxTMI 
1987 (4) TMI 205
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....emsp;On behalf of M/s Srinivasa Metal Industries, Mr. Rao's main point was that the circles were cut from duty paid aluminium strips, and since circles and strips fell in the same sub-item, no duty would be leviable on the circles. Furthermore, the circles came into being only as intermediate forms in the manufacture of utensils and were not sold by them or cleared by them from the factory. They were accordingly, not liable to duty. 4. Mr. Jain the learned Councel for the department said that a circle is a different goods obtained from the strip; it may be true that strip was duty paid, but as soon as circles are cut out of it, a new article came into being with a new name, a new character and a new use. Therefore, in keeping with various High Courts and Supreme Court rulings, the circles being a new manufacture as understood in section 2(f) of the Central Excises and Salt Act, it must pay duty as a fresh item. Furthermore, a "circle" is an item in the heading under item 27 of the Central Excises and Salt Act and strip is another. Therefore having been specifically named as a commodity under the tariff, it is natural and right that the circle, when it appears for the first ....
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....s no stopping the excisability that follows. This is not double taxation, because it is not same duty that is being recovered, but a different duty under a different heading. 8. In the case before us, item 27(b) covered plates, sheets, circles and strips shapes and sections. These products were assessable with the same rate of duty or we might say, one rate of duty, meaning thereby, that in whatever form the aluminium may be, if it is one of these forms, it is liable to this duty. The duty is the same whether the aluminium is presented for assessment as a sheet or a circle or a plate or a strip. This grouping carrying one duty, presents one item or heading, and once that item or heading duty is paid, then any article in the group will remain duty paid under that sub-heading even though it changes its shape or forms from one into any of the others in the group; were that not so there would be a serious anachrosim in the system. A plate in general is an aluminium product with plane surfaces and right angled corners; the opposite sides are equal. The sheet would be of the same dimensions except that it would be thinner than the plate. These two products can be put into circles....
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....t para 20 it stated the points for consideration, and in the first point it observed : In other words whether these various processes carried but by the petitioner company amount to bringing into existence different and distinct goods, commercially known as such, to attract levy of duty under section 4 of the Central Excises and Salt Act, 1944. "In para 23 it quoted a decision in 1978 E.L.T. J 389 in which it observed : The rolling of a billet into a circle is certainly a process in the course of completion of the manufactured product, viz. circles. In the present case, as we have already indicated earlier, the product, that is sought to be subjected to duty, is a circle within the meaning of that word used in item 26A(2). In the other two cases which came before this court, the articles mentioned in the relevant items of the First Schedule were never held to have come into existence so that the completed product which was liable to excise duty under the First Schedule, was never produced by any process". 12. The Supreme Court saw manufacture under the central excise laws as a manufacture of articles mentioned in the relevant items of the First Schedule; when such ....
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....anthanam, Member (J)]. - 14. I had the benefit of perusing the order of my learned brother Shri H.R. Syiem. I regret I am unable to agree with his findings. 15. The appellants received 42403 Kgs of aluminium strips in coils from M/s Hindustan Aluminium Corporation Limited, Renukoot, Mirzapur. They did not show the item in their raw-material accounts. The appellants were manufacturing circles out of aluminium strips and have not make necessary entries in the R.G.1 register as having manufactured circles. These circles were also removed by them from the factory without cover of gate passes. The circles made out of 2526 Kgs. of aluminium strips were more than 1.22mm of thickness and exceeded the exemption limit to attract central excise duty under tariff item No. 27(b). Since the appellants had contravened the provisions of Rule 173-F of the Central Excise Rules, 1944, a show cause notice was issued to them during May, 1975. The appellants received the notice on 14-6-1975 and in their reply urged that the strips had suffered central excise duty at 40% as could be seen from the invoices. The appellants were converting the strips into domestic utensils. They have maintai....
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.... amount to a manufacture as circles are known in the trade parlance as a distinct commodity. Similarly, if strips are made from duty paid sheets it would amount to manufacture under Section 2(f) as the definition includes all processes incidental or ancilliary to the completion of the manufactured product. In this case it is not open to the appellants to contend that circles are only the intermediary product for the manufacture of domestic utensils. For that matter even intermediary products are liable to excise duty. The mere fact that they are not removed from the factory would not be a factor because the taxable event is the manufacture of the goods. In 1985 (20) E.L.T. 280 (Delhi) = 1985 E.C.R. 1337, M/s Metal Forgings Pvt. Ltd. and Another v. Union of India and Others, the Hon'ble Delhi High Court has observed as under : "An intermediate product which is by itself an excisable article is liable to excise duty even though it is not removed from the factory because the duty of excise is on manufacture or production of goods. The taxable event is the manufacture of the goods and not their removal from the place of the manufacture." 18. The identical question as the one....
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....cture, then conversion of sheets into circles or vice versa would be liable to duty. Any other interpretation may amount to ignoring the definition of Section 2-f or reading into the schedule words which are not indicated therein. If a contrary view is to be taken then the principle should apply to other group entries as well. Item 26AA(ia) refers to bars coils, girders, beams, etc., under the same sub-heading. The same amount of duty is prescribed; but one cannot hold that a conversion of bars,, into angels or rods into girders" would not be liable to duty, even though the raw-materials are duty-paid. 20. The concept of manufacture is well-settled and the members principles have been emphasised from the earliest decision in the case of Delhi Cloth and General Mills [AIR 1963 S.C. 791 = 1977 (1) E.L.T. (J 199) (S.C.)]. In the recent decision of the Supreme Court reported in 1985 (20) E.L.T. 179, Empire Industries Ltd. and others v. Union of India and others, the Court has laid down in paragraph 30 as follows : "The taxable event under the Excise Law is 'manufacture'. The moment there is transformation into a new commodity commercially known as a distinct and separate com....
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....at the point of difference needed to be reformulated. It was however pointed out to him by the Bench that under Section 129C(5), it is for the Members of the original Bench to state the point or points on which they differ. Where there is an agreed formulation by them, as in the present case, it would not be open to the President, on the basis of a request from either party, to make an addition or amendment. The learned advocate accepted this position. 4. The Bench also pointed out to Shri Kameswara Rao that there was a decision of the Tribunal which would be relevant to the case, though not referred to by either of the two learned Members. This was the decision of a Larger Bench of the Tribunal in the case of Guardian Plasticote Ltd., Calcutta v. Collector of Central Excise, Calcutta and Others. [1986 (24) E.L.T. 542 (Tribunal)]. It was suggested to the learned advocate that he might take this decision into account while making his submissions. 5. The learned advocate submitted that the view taken by Member Shri H.R. Syiem was correct, and should be agreed with. If this was done, the appeal would succeed. He cited a number of decisions in support of the appellants'....
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.... (Tribunal) = 1986 (9) E.C.R. 298 (Cegat)]. The relevance of this citation is, however, not apparent. 9. With reference to the specific point of difference, involving the question of double taxation, the learned advocate cited the decision of the Supreme Court in the case of Union of India and Others v. Tata Iron & Steel Co. Ltd. (A.I.R. 1976 S.C. 599). This case related to excise duty on steel ingots manufactured from duty paid ingot moulds and bottom stools, in admixture with non-duty paid scrap and hot metal. It is judgment, the Supreme Court had observed that "there cannot be double taxation on the same article". 10. Shri Kameswara Rao accordingly submitted that the view of Member Shri Syiem was correct. 11. On behalf of the Department, Shri Jain's first contention was that sub-item (b) of Central Excise Tariff Item 27 read as follows :- "manufactures, the following, namely, ............ circles Since circles (of aluminium) had been specifically mentioned in the category of "manufactures", it was not open to the appellants to contend that the circles were not manufactures or had not been manufactured. In this connection Shri jain referred to para 7 of t....
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....eared to be double taxation in a case like the present. He cited the following decisions :- Supreme Court in the case of A. Hajee Abdul Shakoor and Company v. State of Madras [1964(8) S.C.R 217]; Supreme Court in the case of Shri Siddhi Vinayaka Coconut & Co. & Others etc. v. State of Andhra Pradesh & Others (1975 1 S.C.R 440); Supreme Court in the case of Avinder Singh etc. v. State of Punjab & Another etc. [1979 (1) S.C.R 845]; Madras High Court in the case of Brakes India Ltd., Madras v. Superintendent of Central Excise, Madras and Others [1986(26) E.L.T. 211 (Mad.)]; Andhra Pradesh High Court in the case of M/s. Bhadrachalam Paper Boards Ltd., Khammam v. Collector of Central Excise & Customs, Hyderabad [1984(18) E.L.T. 229(A.P.) = 1984 E.C.R. 1627 (A.P.)]} Tribunal in the case of Union Carbide India Ltd., Calcutta v. Collector of Central Excise, Madras [1983 E.L.T. 549(CEGAT) = 1983 ECR 552D (Cegat)]; Tribunal in the case of M/s. Ceakay Rubber Industries, Changanacherry, Kerala v. Collector of Central Excise, Madras [1983 ECR 687D (Cegat)]; Tribunal in the case of Mahindra Engineering and Chemical Products' Ltd., Pimpri, Pune v. Collector of Central Exci....
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....o learned Members. I have also considered the arguments advanced at the hearing before me. 23. In his attempt to support the order recorded by Member Shri Syiem, the learned advocate of the appellants advanced a number of grounds. One of these was that double taxation was not permissible. The others were the following :- (1) Although aluminium circles might have come into existence, there was no manufacture of circles, because the end-product was the aluminium utensil; (2) Mere cutting of aluminium strips into circles would not amount to manufacture; (3) Change of identity of an article during repairs would not amount to manufacture. In his turn the learned S.D.R. cited authorities against these propositions. As was pointed out to Shri Kameswara Rao at the outset, the present Bench is concerned only with the point of difference between the two learned Members constituting the original Bench. It is on this point that the President has to give his decision and he cannot entertain requests to vary the point or to add other points. This aspect has been dealt with in para 11 in my order in the case of M/s. Jayashr....
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....y demanded on the circle cut from the strips will be a new duty; there is no impropriety in recovering such duty, because it is a duty that the substance, when it turned into circle from sheet, had never paid before. xxx xxx xxx 13. ..... Since the circles and the sheets, listed in the same heading, are subject to the same duty, they are immune to that duty once they have paid it under any of the forms listed there" ...... It is very clear from the above extracts that the only basis for Shri Syiem's disagreement with Shri Santhanam was that the article "circle" on which duty was sought to be recovered, was mentioned in the same tariff entry as the article "strip" in which capacity duty had already been recovered. His disagreement was not on the ground that the process was not one of manufacture, or that circles could not be charged to duty because they did not form the end-product In other words the disagreement between the two learned Members was only on the question whether the levy of duty on the circles, which admittedly came into existence as an intermediate product, would constitute d....
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....put the question beyond dispute." This observation by the Supreme Court itself would support our finding that the absence of amendment to Section 2(f) with reference to T.I.17 need not Ruleout our conclusion as to the process adopted by the appellants amounting to manufacture as defined in the Act. xxx xxx xxx 21. As earlier seen M/s. Guardian Plasticote themselves admitted in their own writ petition that the laminated product manufactured by them was commercially distinct from kraft paper received by them or the polythene used in the process of lamination. This process of lamination made the two layers of kraft paper impervious to water and oil and the resultant product was therefore, specially suited for packing ammunition. That was why the same was being exclusively supplied to the Defence Department. Since therefore, the process of lamination, which amounted to manufacture, led' to the emergence of a new and distinct commercial product, marketable as such, the conclusion is inevitable that this new product would invite imposition of duty, though there may not be any move away from tarif....
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....for. That is the ratio of the Supreme Court's DCM judgment on vegetable oil." 27. Thus, two of the learned Members of the Bench in the Guardian Plasticote Ltd. case expressed a view different from that of the majority. However, it was held that in view of the decision of the majority the appeals had to fail. In other words, the final decision of the Larger Bench was that the laminated paper was liable to duty as "packing and wrapping paper", although made from kraft paper which had borne duty as "packing and wrapping paper", under the same sub-item of the Central Excise tariff. 28. The above decision of the Larger Bench is squarely applicable to the present case, where the question is whether aluminium circles falling within the description of sub-item (b) of Item 27 would be liable to duty even though made from strips which had borne duty under the same item and sub-item. 29. Since the issue is covered by the decision of a Larger Bench of this Tribunal, there is hardly anything more which needs to be said. The Larger Bench in question, as seen from the opening para of Shri Raghavachari's order, was set up because of a conflict between earlier orders of the Tribu....
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....ms duties and Excise duties on goods belonging to the Government (including the State Governments) would not be contrary to the provisions of Article 289 of the Constitution. The reference was heard by a Bench of 9 Hon'ble Judges of the Supreme Court. 5 Hon'ble Judges, including the then Chief Justice of India, Shri B.P. Sinha, held that the immunity to States in respect of Union Taxation, under Article 289(1), did not extend to duties of Customs. 4 Hon'ble Judges expressed the contrary view, namely that Article 289 precluded the Union from imposing Customs duties on the import or export of property of a State. Thus, there was a majority opinion of 5 Hon'ble Judges, and a minority opinion of Hon'ble Judges. Nevertheless the reference was deemed to be answered according to the majority opinion. The proposed amendments to the Sea Customs Act (incorporated in the Customs Act, 1962) and the Central Excises and Salt Act were duly made and the relevant provisions are still very much on the statute book, without their constitutionality being challenged. The fact that the opinion of the Hon'ble Supreme Court was on the basis of a bare majorit....