TaxTMI 
TaxTMI 
1984 (3) TMI 246
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..../73-C.E., dated 3-2-1973 and No. 72/74-C.E., dated 13-4-1974. EXEMPTION to piping and tubing of unhardened vulcanised rubber:-In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Govt. hereby exempts piping and tubing of unhardened vulcanised rubber, falling under Sub-item (3) of Item No. 16A and specified in column (2) of the Table below from the whole of the duty of excise leviable thereon :- Serial No. Specification (1) (2) 1. Piping and tubing designed for use as component part of medical or surgical instruments or of sports goods. 2. Piping and tubing designed for use in laboratories provided each piece of such piping and tubing is manufactured in length not exceeding three metres and has a bore of a diameter not exceeding 1.27 centimetres. 3. Piping and tubing designed to be, or converted in the factory of its production into component parts of machinery articles (including typewriters) provided such component parts do not perform the function of conveying air, gas or liquid (emphasis ours). 4. Piping and tubing designed for use - a) as handled grip for perambulat....
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....e duty accordingly. But on an exemption Notification being issued with effect from 29-8-67; namely, Notification No. 197/67, exemption was claimed with reference thereto, which position was conceded by the Department. 5.  The appellants allege that this stand; namely, the goods being covered by T.I. 16A (3) and then held entitled to benefit of Exemption Notification No. 197/67 was confirmed by the Collector in his order dated 10-6-1968 whereby although the refund claim filed by them was dismissed on the view that the notification could not operate retrospectively but it was clearly held that with effect from the date of said notification, the products would be exempt from excise duty, and that before that there was endorsement of this position by the Collector of Central Excise also, vide his letter dated 21-10-1967. 6.  The appellants further plead that this position continued, and clearances effected after due declaration on the classification lists to the effect that excisable goods were being manufactured, but cleared without payment of duty by virtue of the aforesaid notification, and even after the introduction of T.I. 68 in the CET, the Superintendent of Cent....
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....unity of hearing, upheld contentions of the appellants, by his order dated 20-11-1981. Consequently, the notice to Show Cause dated 24-9-1980 was withdrawn. However the Collector of Central Excise, Bombay-II opined that Assistant Collector's order was liable to be reviewed. He accordingly, in exercise of the power vested in him, under Section 35A(2) of the Central Excises and Salt Act, 1944, as it then existed, issued a Review Notice to the appellants on 18-1-1982, intimating them that on examination of the case records, he was tentatively of the view that the order passed by the Assistant Collector was not legal and correct, and that he considered the Synthetic Rubber 'Aprons' and 'Cots' to be essentially textile machinery components, and were distinctly known, and marketed as such, and that these finished products were not covered by any of the Sub-items under T.I. 16A of the CET nor were classifiable under any other Tariff Entry 1 to 67, and as such would appropriately be classifiable under the residuary entry; namely Tariff Entry 68 and so he was prima facie of the view that the Assistant Collector had erred in holding the products in question as falling under T.I. 16A(3) of th....
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....he effect that these 'Cots' and 'Aprons' were known as rubber tubing and piping. 13.  The appellants further contend that what the Collector has described as patent product is only an intermediate product which by itself was neither capable of being bought and sold nor known to the market and it were only the cut pieces of such tubing that were being traded as 'Aprons' and 'Cots', and that the product before cutting, as well as after, remains the same; the difference being that before the said operation, the product was not marketable and it becomes so, only after cutting into different sizes. Pleading that cutting did not amount to 'manufacture' inasmuch as it did not alter the character or quality of the article nor did it bring into existence any new substance, nor involve any chemical changes, and even all other dimensions remain the same barring the length, they contend that the Collector has, erred in holding that the products before cutting, and after, are two separate entities. The appellants place reliance in support of this contention on the Supreme Court Judgments in the case of DCM v. Union of India (AIR 1963 SC 791) and South Bihar Sugar Mills v. Union of India....
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....ion on the part of the Collector of the real issues involved, the appellants assert that their products are nothing else but tubing and piping of vulcanised unhardened rubber classifiable under T.I. 16A(3), and inasmuch as they are designed to be, and are converted into parts of textile machinery, they come within the ambit of Sub-item (3) of the notification and that Collector's order, holding them to be classifiable under T.I. 68, was not sustainable. 16.  Shri D.B. Engineer arguing for the appellants canvassed the same arguments as set out in the grounds of appeal, and reproduced above. He highlighted the wording of exemption notification on which the appellants are placing reliance, and all different Sub-items thereof, to draw out the distinction that whereas Sub-item (3) on which the appellants rely, did not contain any reference to minimum or maximum length, the preceding Sub-item specifically saying so, by laying down maximum length in metres, as well as the diameter of the bore, in terms of specified centimetres, and further that the 'Aprons' and 'Cots' did not involve any process other than simple cutting to shorter given lengths from the tubings which the Collecto....
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.... permitted, and the 'converted' thing having been covered by the notification, even after cutting into smaller pieces, the tubings would be exempt particularly when no length has been specified to earn this exemption. He placed reliance in support of this argument on a Bench decision of the Tribunal 1983 E.L.T. 2020 (CEGAT) - Arvind Mills Ltd., Ahmedabad v. Collector of Central Excise, Baroda, and further referred to a Tariff Advice issued by the Central Board of Excise & Customs in 1980, being Tariff Advice No. 59/80, dated 27-9-1980, to the effect that woollen blankets made from fabrics in running length after cutting into required sizes, hemmed and stitched with satin borders, would continue to be classifiable under T.I. 21 of the CET, and urged that when stitched handkerchiefs as in the Arvind Mills case (supra), or bordered and hemmed blankets cut from woollen fabrics of running length, as contemplated by Tariff Advice of the Board, could be treated as falling within T.I. 19 of 21, respectively, why could the tubing and piping irrespective of their length, not continue to be treated as tubing and piping, as contemplated by the exemption notification. 20.  He then went ....
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.... hearing, Shri D.B. Engineer wanted, to present an application for amendment of certain portions of the appeal, stating that in paragraphs 1 and 2 of "Statement of Facts", the word 'manufacture' has crept in by inadvertence and that the appellants sought permission to delete the same as it was their contention that mere cutting was involved which was not a process of manufacture. 23.  The learned SDR opposed this prayer by asserting that this was not a case of inadvertence inasmuch as, right from the beginning, that is, from the date of reply to Show Cause Notice (vide para 3-Ex./C) they had used this expression and it was not now open to them to turn round and say that no manufacture was involved. It was, however, made clear to both the sides that the decision in the case would depend upon the substance, and not on the words used or employed in the pleadings. Appreciating this position, Shri Engineer did not press his application, though reiterated that the stage of conversion of tubing and piping into Aprons and Cots did not involve any manufacturing process. He also placed on record certain papers in accordance with the requisition made by the Bench during hearing; one o....
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....nsp; He vehemently contended that the end-products in this case; namely, 'Aprons' and 'Cots' could not be considered same as piping and tubing because these products carry a distinct use and trade name and that whereas piping and tubing signify some material in running length, these Aprons and Cots were specific things of given sizes. He further referred to the technical data prepared in the form of a booklet by the appellants, copies whereof were supplied during hearing, in reply to a query by the Bench, which indicated positively, according to Shri Tayal, that apart from the fact that they were prepared in accordance with specific technical requirements; otherwise also, these involved processes, further than cutting, inasmuch as beveling of edges was also involved, and that the very fact that there are separate ISI specifications for both the products, establishes that these products had a recognised trade nomenclature and was not just a name given by the appellants or their principals, as was the suggestion during hearing. He also placed reliance on Case Law in support of this contention that ISI specifications indicate true trade meaning. 27.  He defended the order of t....
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....d. v. Supdt. of Central Excise, Mirzapur and Another adding that even the industrial licence of the appellants (page 30) indicates that these Rubber Cots and Rubber Aprons were introduced as a result of expansion programme and the description of the goods was "other rubber goods" which meant that they were supposed to be rubber goods, other than covered by T.I. 16A. 30.  Shri D.B. Engineer in a short rejoinder stressed that every word of the notification under reference was material and has to count and that this being couched in a language which suggested that even "converted" tubings were exempt, and that consequently even though these may be carrying distinct names, they would still remain tubings and pipings. He further argued that concept of manufacture could not be mixed up in this situation, when it has been factually established that no more than cutting, which he described to be the simplest process, was involved and that it should be seen in the light of the overall picture as to whether, cutting here, amounted to manufacture or not and in any case, this, according to him, was permitted by the notification itself (conversion). 31.  He further made referenc....
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.... in case these were held to be so; in view of the background of the case, and the orders passed by the Excise authorities and the communication sent by them from time to time, there would be no justification, in any event, for recovery being made retrospectively, and that at best it could be prospectively, i.e., from the date of the order of the Collector. 34.  We have given our earnest consideration to the contentions, canvassed by the learned Counsel and we consider it expedient to deal with the points made by him at seriatim. 35.  Since the main thrust of his arguments was the terms of the notification which the appellants are pressing into aid, to claim complete exemption for their products, we consider it expedient to take up this issue first. Even after keeping in full focus the stress laid by the learned Counsel on the expressions, used in the relevant sub-item (No. 3 of the Table of the notification, which he termed to be peculiar), we cannot persuade ourselves to concede the argument, adopted by the learned Counsel to the effect that exemption of duty would be attracted at two stages; namely, firstly to the pipings and tubings and then to the finished produ....
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....e learned Counsel in this regard was that irrespective of carrying a specific name; no manufacturing process intervenes between the stage of 'tubings' and 'pipings' and their conversion into these 'Aprons' and 'Cots', which are components of textile machinery, except for bare cutting in shorter lengths. It was urged that to amount to manufacture, there ought to have been involved a complete change in the substance, what was described as transformation, but in this case, the argument ran, what was tubings and pipings remain so, except for reduction in length, even after cutting. ' 40.  We have examined this contention with great care in view of reliance placed by the appellants on the authorities of the Hon'ble Supreme Court namely, in the case of Union of India and Another v. Delhi Cloth & General Mills Co. Ltd. & Others, 1977 E.L.T. (J 199) = (AIR 1963 SC 791), South Bihar Sugar Mills v. Union of India (AIR 1968 SC 922) and that of Dunlop India Ltd. v. Union of India & Others (AIR 1977 SC 597) and that of Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan and Others [1980 E.L.T. 383 (SC)] laying emphasis on the dicta that every process did not amount to manufacture....
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....d in conjunction with the drafting rollers of apron drafting systems for the purpose of exercising control on the movement of fibres in drafting zones by virtue of their resilience. Such aprons provide a sort of semi-positive grip on the fibres, thus preventing them from being carried forward out of turn in bunches to cause drafting irregularity. Such aprons are also made of leather to serve the same purpose." 44.  The specifications further provide that these aprons should be smooth, uniform in texture and pliable so that they are liable to bend themselves to the shape of the sharp angle nose bars, and the products themselves, as would be indicative from para 3 onwards, are a result of a manufacturing process, which is a highly intricate one. Same observations apply to the twin product; namely, 'Cots' which are described in IS: 7175-1974 to be meant, "for top rollers used in textile spinning machinery". It is further noticed from Appendix-A to these specifications that specialised type of buffings is needed before the Cots can be pressed into service. 45.  This explains the contents of page 13 of the technical data, printed by the appellants themselves, for the gui....
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....tly relevant to the point in controversy, is the case of Kores (India) Ltd. v. Union of India & Others [1982 E.L.T. 253 (Bom.)] (cited by the learned SDR), where a Division Bench held that "even the process of cutting large rolls of paper into specific sizes and dimensions, and to roll them into teleprinter rolls with the aid of power driven machines amounts to manufacture under Section 2(f) of the Central Excises & Salt Act, 1944". We also endorse the contention of the learned SDR that to the extent that there is a Division Bench decision of Bombay High Court specifically on this point, the Government of India's decision relied upon by the appellants, namely, 1981 E.L.T. 502 in Re. Bralco Metal Industries Pvt. Ltd., stands superseded. 49.  Besides, there is umpteen number of reported cases, as cited by the SDR, where much simpler processes have been held to be amounting to manufacture in the context of the use of the particular products involved in the respective cases. For instance, in case Metro Readywear Co. v. Collector of Customs reported as 1978(2) E.L.T. (J520),the High Court of Kerala held the process of ironing applied to readymade garments before they could be pa....
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....he end-product liable to duty, the argument cannot be countenanced that cutting, which, in this case happens only to be one of the steps for bringing into existence these 'Aprons' and 'Cots', would not amount to manufacture, so as to attract excise duty. 53.  We consider it expedient here to distinguish the cases cited by the learned Counsel; the first being that of Arvind Mills Ltd. v. Collector of Central Excise (1983 E.L.T. 2020 - CEGAT) where handkerchiefs, though stitched and hemmed, have been held to be cotton fabrics within T.I. 19 as compared to T.I. 68. This case is clearly distinguishable, as description of the term 'cotton fabrics', as enshrined in T.I. 19 of the CET, contemplates products which have undergone stitching etc. Bench decision was thus in recognition of this definition, inherent in the Tariff Entry itself. The same principle would explain the trade notice relating to woollen blankets, relied upon by the appellants, issued in 1980 because T.I. 21, similarly covers, even embroidered articles made of wool. 54.  Similarly, in the case relating to sizing of yarn cited as 1981 E.L.T. 867 (Bom.) (Shreeniwas Cotton Mills Ltd. v. Union of India), it h....
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....convey much, because, they also describe 'Cots' and 'Aprons' as component parts of spinning and textile machinery. The portion, that the products were nothing, but "rubber tubings", strikes as mere superfluity, given on requisition of the appellants, and thus rightly ignored by the Collector. 56.  We have thus not an iota of doubt in our mind that these products, known as 'Aprons' and 'Cots' are finished manufactured products, wholly distinct from tubings and pipings, from which they are made, and thus appellants' claim for benefit of exemption for these products is not at all tenable, with reference to Notification No. 197/67-CE. In the result, we do not feel called upon to examine the plea convassed by the learned Counsel that in the event of doubt in the matter of interpretation of fiscal statutes, benefit should go to the assessee. 57. Even the Supreme Court has held that where two alternative interpretations are possible of the scope and applicability of a certain provision, and when the Customs authorities are found to have adopted a reasonable view, though favourable to the Revenue, then the finding cannot be assailed merely because another view as against the one....
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.... debarred from revising or reviewing the same for all time to come because all those cases involved modification of stand by subordinate authorities or same authority without any change in position. We, on the other hand, consider that a balance has to be struck on the guidelines laid down by High Court of Delhi in two cases reported as 1981 E.L.T. 114 (Bawa Potteries, Mehrauli v. Union of India & Another) and 1981 E.L.T. 328 (J.K. Synthetics Ltd. & Another v. Union of India & Others) where certain situations have been recognised, such as subsequent judgment of higher authority or change in Tariff Entry or withdrawal of previous notification or issuance of fresh notification or some other similar cogent reasons; the former case going to the extent of holding that power of review was inherent in the wording of Rule 10. The synthesis of the view, enunciated in the aforesaid two authorities, has been worked out in a Bench decision of the Tribunal reported as Nuchem Plastics Ltd. v. Collector of Central Excise, Delhi, [1983 ECR 1888-D (CEGAT)]. 60.  In view of this position and finding that order of the Appellate Collector as well as Collector's letter in this case, were both p....