TaxTMI 
TaxTMI 
2010 (8) TMI 2
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....Appeal No. 5341 of 2005 as the lead case. The noticee is carrying on the business of producing and selling 'tarpaulin made-ups'. The 'tarpaulin made-ups' are nothing but the tarpaulin cloth which is prepared by making solution of wax, aluminum stearate and pigments which are mixed and the solution is heated in a vessel and transferred to a tank. Grey cotton canvas fabric is then dipped into this solution and passed through two rollers, where after the canvas is dried by exposure to atmosphere. Thereafter, the tarpaulin made-ups are prepared by cutting the cloth into various sizes and stitched and eye-lets are fitted. The noticee states that the process of mere cutting, stitching and putting eyelets does not amount to manufacture and hence, the department cannot levy Excise Duty on tarpaulin made-ups. However, the view of the department is that, the "made-ups" prepared by means of cutting, stitching and fixing of eye-lets amounts to manufacture and, hence, they are exigible to duty under the Central Excise Tariff Act, 1985 (for short 'the Act'). 3) A show cause notice was issued by a competent authority dated 31.8.1995, inter alia directing the noticee to show cause as to why tarpa....
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....ween the decision of the Andhra Pradesh High Court and the case at hand. Accordingly, the Tribunal vide order dated 10.01.2005 allowed the appeal filed by the assessee. CIVIL APPEAL: 7) Being aggrieved by the decision of the Tribunal the Revenue has filed Civil Appeals and has raised the following question of law for consideration and decision. They are:- a) Whether the process of converting 'Tarpaulin Fabrics' into 'Tarpaulin made-ups' would amount to manufacture when the said process results in an entirely different commodity with different marketable value? b) Whether the said process would amount to manufacture as defined under Section 2(f) of the Central Excise Act, 1944? 8) Sri R.P. Bhatt, learned senior counsel for the revenue contended, that, the Tarpaulin made ups are made out of Tarpaulin fabric by cutting Tarpaulin fabric to a required size, margins are stitched, and eye lets are punched depending on the requirement of the consumers. Tarpaulin made ups are a distinct marketable commodity and, hence, it should be held exigible to central excise duty. In aid of his submission, the learned senior counsel has placed reliance on the observations made by this court ....
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....r machinery. The word includes any process incidental or ancillary to the process of manufactured product. This Court has in several judgments starting from Tungabhadra Industries v. CTO, [(1961) 2 SCR 14], Union of India v. Delhi Cloth & General Mills Co.Ltd., [(1997) 5 SCC 767], South Bihar Sugar Mills v. Union of India, [(1968) 3 SCR 21] and line of other judgments have explained the meaning of the expression 'Manufacture'. In all these judgments, this court has observed that "manufacture implies a change, but every change is not a manufacture and yet every change in an article is the result of treatment, labour and manipulation. But something more is necessary....... There must be transformation, a new and different article must emerge, having a distinctive name character or use". 14) The definition was amended and Section 2(f)(ii) was introduced vide Central Excise Tariff Act with effect from 28.2.1986 by Act 5 of 1986. It is worded thus: "Manufacture includes any process which is specified in relation to any goods in the Section or Chapter Notes of the Central Excise Tariff Act, 1985 as amounting to manufacture". 15) Whenever a commodity undergoes a change as a result of so....
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....d fact." The process may vary, but it is only the change that will bring into existence a new and distinct article known to the consumers and the commercial community as a commercial product, which can be no longer regarded as the original commodity, can be deemed to be 'manufacture'. 19) In Empire Industries Ltd. v. Union of India, [(1986) 162 ITR 846(SC)], this Court has stated that the transformation into something else "is a question of degree, whether that something else is a different commercial commodity having its distinct character, use and name and commercially known as such from that point of view, is a question depending upon the facts and circumstances of the case." 20) In an Australian decision in the case of Adams v Rau, [46 CLR 572 High Court of Australia] shorthand writers were involved in process of taking notes and later transcribed the notes by using papers. Evatt J. observed that "The medical practitioner who provides the service of taking X-rays and furnishes copies of the skiagraph to the patient, although he causes a new thing or entity to come into existence, is not a producer of goods. Nor is the artist who makes an etching for a client and provides him ....