TaxTMI 
TaxTMI 
1992 (6) TMI 106
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.... for issue of a certificate certifying that the process of slitting of Video Magnetic Tapes into Pancakes from jumbo rolls is exempted from the Central excise control. Therefore, no licence is required. The Assistant Collector rejected their request on the ground that the process of slitting of jumbo rolls into pancakes amounts to manufacture and therefore, no certificate as prayed for can be issued. On appeal, the Collector confirmed the order of the Assistant Collector. Hence the appeal before us. 3. The relevant tariff heading reads as follows :- Tariff Heading 8523.13: "Video Tapes in the form of jumbo rolls, pancakes, hubs or reels, before amendment the Tariff Heading 85.23 read as "Prepared unrecorded media for sound recording or similar recording of other phenomena, other than products of Chapter 37". A reading of the tariff entry shows video tapes in any form whether it is in the form of jumbo rolls or pancakes or mini-pancakes, falls under Tariff Entry 8523.13. The Assistant Collector held that from a reading of the tariff entry, "it can be considered that there is specific entry for each of the products Such as jumbo rolls, pancakes, mini-pancakes in the new t....
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....s is different from the use of pancakes. Though the character does not change since there is change in use and name pancakes are distinct and separate product and therefore, they are liable to duty and the process of slitting amounts to manufacture. According to him, the rate of duty is not relevant criteria. In other words, merely because there is the same rate of duty in respect of jumbo rolls, as well as pancakes it cannot be said that there is no manufacture. Similarly, he submitted that same sub-heading or different sub-headings is not relevant criteria for determining whether the process amounts to manufacture or not. Jumbo rolls and pancakes are differently known in the market. They are distinct and separate products. Further the tariff entry separately identifies the products. Therefore, the process of slitting amounts to manufacture. He further pointed put that the judgment of the Madras High Court does not relate to the present tariff entry but relates to a tariff entry prior to the amendment in 1988. He, therefore, prays that the order of the Collector and the Assistant Collector should be confirmed. 6. Shri Jain appearing for the appellants while reiterating the argu....
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.... Court held that if a person manufactures photographic film rolls such manufacturing process would attract the levy of duty under Tariff Entry 37.02. If another person manufactures photographic flats and films then that manufacturing process would attract Tariff Entry 37.01. But if photographic flats or films are not manufactured at all but only made out of jumbo rolls by cutting into smaller pieces, then thereafter no manufacturing process involved Tariff Entry 37.01 cannot be made use of to hold that there is a manufacturing process. The above observations squarely apply to the facts on hand. We may also refer to the order of this Tribunal in Hindustan Photo Films (supra) wherein it was held that, "the nature of the subject jumbo rolls namely, cinematograph films is not to be doubted though it is true that they cannot be straightaway put into cinematograph equipment without undergoing the process of slitting and perforation. These latter physical processes actually serve to help the mechanical process of fitment into the equipment and movement of the film in the equipment. But the quality of the goods which makes it cinematograph colour positive film is essentially attributable t....
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....the selling dealers and manufacture of various commodities in their rolling mills though known as different commercial commodities they being specifically enumerated and mentioned in the definition of iron and steel, they cannot become different goods. The High Court accepted the said contention and held that conversion of the materials purchased by the petitioners from the selling dealers, the various commodities manufactured by them in their rolling mills although became by name different commercial commodities, they being specifically enumerated and mentioned in the definition of iron and steel, the assessing authorities are not correct in holding that they become different goods. Applying the same principle, the fact that the jumbo rolls are slit into pancake does not make pancakes into different goods as they are mentioned under the same sub-heading of the tariff. It therefore, follows from the above that the authorities below are not justified in holding that the appellants are not entitled to the certificate requested for. The appeal is accordingly allowed. (S.V. MARUTHI) MEMBER 9. [Dissent per : P.C. Jain, Member (T)]. - I have carefully gone through the....
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.... proposed by the learned sister, which are as follows :- (i) Computer Graphic (P) Ltd. v. U.O.I. - 1991 (52) E.L.T. 49l. (ii) Collector of Customs v. Hindustan Photo Films - 1991 (52) E.L.T. 301. (iii) A. Venkateswarlu v. Govt. of Andhra Pradesh - AIR 1978 S.C. 945. (iv) Konark Steel Industries & Another v. Sales Tax Officer - 1969 STC 187. (v) Basheer Ahmed v. CCE - 33 ECR 507. (vi) Inter Trade Electronics (P) Ltd. v. Collector of Customs - 1990 (49) E.L.T. 455. 13. The Department on the other hand has contended that the judgment of Madras High Court in Computer Graphics mentioned supra and all other judgments relied upon by the learned Advocate for the appellants are either on the old Tariff or on Import Trade Control (ITC) aspect or on sales tax matters, which are peculiar to the description of goods mentioned in the relevant Tariffs, Notifications, ITC Policy or Sales Tax Laws. None of these judgments, submits the learned Departmental Representative is on the new Tariff Heading 8523.13 which is the subject matter of consideration in this case and which has been s....
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....wyers Edition page 1012. In that case the Collector has levied a duty upon the shells on the ground that they were manufacturing shells. What was found was that the outer layer of the shells was cleaned by acid and then grinding off the second layer by an emery wheel, so as to expose the brilliant inner layer. The court on that held that the shells were still shells and thus they had not been manufactured into a new and different article having a distinctive name, character or use from that of a shell and the application of labour to an article does not necessarily make it into a distinct article. It will be seen that what was originally a shell, still remained shell though cleaned for ornamental purposes. This case is like that in A.I.R. 1980 S.C. 169 (supra). It is significant to note that in this very case a duty of 30% ad valorem was imposed on "coral, cut or manufactured" was made exempt from duty. The court observed that this provision clearly implies that but for the special provision imposing a duty on cut coral, it would not be regarded as a manufactured article, although labour was employed in cutting it. What is important is that the Court accepted that if the legislativ....
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....lear that the legislature was aware that billets are converted into circles, and it was decided that excise duty should be leviable at both stages. When the legislature used the word "manufacture" in connection with circles, after having taken account of the fact that billets were already subjected to excise duty, it is obvious that the process, by which the billets were converted into circles, was held by the legislature to amount to manufacture. The word "manufacture" is defined in Section 2(f) of the Act as including any process incidental or ancillary to the completion of a manufactured product. 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 ought 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 proce....
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....impugned in this appeal does not contain any error. The appeal, therefore, fails and is accordingly dismissed." (Emphasis supplied) The view taken by the Supreme Court in para 4 reproduced above relying on its earlier decision in the Empire Industries Ltd. - 1985 (20) E.L.T. 179 (S.C.) confirms the view taken by the larger Bench of the Tribunal in the case of Guardian Plasticote Ltd., Calcutta v. Collector of Central Excise, Calcutta & Others - 1986 (24) E.L.T. 542. It must be remembered that in the case of Guardian Plasticote, the Tariff Entry had not specifically spelt out the goods in question. Merely by the test of commercial parlance, it was held that the process of bringing into existence bituminized kraft paper or polythene laminated kraft paper from duty paid kraft paper were liable to duty again because the two products were commercially known differently. 16. It is immaterial that the Pancakes and Jumbo Rolls fall under the same Tariff sub-heading, so long as they are known differently in the market. As admitted by the appellants that it is so, it cannot be said that the process of slitting is not a process of manufacture in the instant case, apart from the fact tha....
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....ould ever not be held as amounting to manufacturing process." (Emphasis supplied) 17.2 Again reliance placed by the learned Advocate on Tribunal's decision in the case of Hindustan Photo Films mentioned supra is also misplaced. The questions under consideration before the Tribunal in that case were the two entries (1) specific entry Tariff Item No. 37(1) reading as "Cinematographic films unexposed" as against Tariff Entry 68, the erstwhile residuary tariff entry. Relying on the well settled position of law, the Tribunal came to the conclusion that Tariff Entry 37(1) is more specific to the goods than Tariff Entry 68. It would, thus, be seen that the question before the Tribunal in the Hindustan Photo Films was in a different perspective than what is present in this case. 18. Hence I reject the appeal. (P.C. JAIN) TECHNICAL MEMBER POINT OF DIFFERENCE OF OPINION 19. "Whether in the facts and circumstances of this case, slitting of duty paid Jumbo Rolls into Pancakes would amount to manufacture and consequent liability of the Pancakes to duty". (S.V. Maruthi) JUDICIAL MEMBER (P.C. JAIN), TECHNICAL MEMBER 20. [Order per : N.....
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....Products Ltd. & Another v. Union of India & Others - 1980 (6) E.L.T. 735 (Del.) (b) Union of India v. Hindu Undivided Family Business known as Ramlal Mansukhrai, Rewari and Another - 1978 (2) E.L.T. J389 (c) Laminated Packaging Private Ltd. v. Collector of Central Excise - 1990 (49) E.L.T. 326 (S.C.) (d) Guardian Plasticote Ltd., Calcutta v. Collector of Central Excise, Calcutta & Others - 1986 (24) E.L.T. 542 23. Shri Jain invited attention to the Tariff Heading 8523.13 and submitted that it covered video tapes in certain specified forms only - five of them were clubbed in one sub-heading and one was separated. He submitted that the expression, "in the form of ...." was restrictive in nature and not illustrative. Thereafter, the learned Counsel handed over a copy of Tribunal's Order No. 612/86-B1, dated 26th September 1986 in the case of M/s. Light Metal Works v. Collector of Customs, Bombay in which it was decided that no duty was leviable on a circle cut out of a duty paid aluminium sheet under Item 27(b) of the erstwhile Central Excise Tariff on the ground that both sheet and circle were listed in the same item and were subject to the same duty. The Tribunal observe....
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....rforation did not amount to manufacture because these physical processes actually served to help the mechanical process of fitment' into the equipment and movement of the film in the equipment. He submitted that the same principle should apply to jumbo rolls of video tapes which were slit into pancakes for being used in video cassettes. 26. Shri Jain referred to the wordings of the sub-heading and submitted that the different forms mentioned in 8523.13 were forms of video tapes and it had been held in decisions cited by him that mere change of form did not amount to manufacture. He also cited the Madras High Court judgment in the case of Computer Graphic Ltd. v. Union of India -1991 (52) E.L.T. 491. As for the judgment of the Supreme Court in the case of Laminated Packaging (supra) cited by learned Member (Technical) in his order, Shri Jain submitted that by the process of lamination the character of Kraft paper had undergone total change which is not the position in the case of slitting of jumbo rolls of video tapes. It cannot be said that pancakes which were obtained by slitting of jumbo rolls were an altogether a new and different article which was the result of any process o....
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....med the same function viz. that of carrying fluids, the Supreme Court had held that they were both classifiable under the same item. 28. Shri Sharma cited the decision of the Supreme Court in the case of Empire Industries Ltd. & Others v. Union of India - 1985 (20) E.L.T. 179 and referred to paragraphs 31 to 33. He submitted that the Supreme Court had held that certain processes in the case of fabrics, amounted to manufacture although the fabrics had continued to remain as fabrics. Similarly, the form of video tapes had undergone a change and this change had to be taken note of as a process of "manufacture". He also cited the following :- (a) Associated Soap Stone Distributing Co. Pvt. Ltd. v. Collector of Central Excise - 1985 (22) E.L.T. 109 (Tribunal) - Grinding/Crushing of soap stone lumps into soap stone powder has been held by the Tribunal to be a process of manufacture. (b) Dy. Commissioner of Sales Tax (Law) v. Coco Fibres - 1991 (53) E.L.T. 515 (S.C.) - It has been held by the Supreme Court that conversion of coconut husks into coconut fibre amounts to 'manufacture' since fibre is a distinct commodity known in the commercial parlance - Section 5 of the Kerala Gene....
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....ur Paper Mills Co. Ltd. &Another -1985 3 SCR 26 which was a decision on the Orissa Sales Tax Act, this question was considered in the background of the fact whether planks, cut into sizes, etc., sawed out of logs, are different from logs in its nascent state. 5. It may be worthwhile to note that 'manufacture' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more was necessary and there must be transformation; a new and different article must emerge having a distinct name, character or use. See Union of India v. Delhi Cloth Mills (supra) at page 596 of the report. Having regard to the facts found in this case by the Tribunal, which ultimately is the final fact finding authority, we are of the opinion that regard being had to the principles for determining the questions which were correctly applied ;in the decision of the Tribunal, in the facts of this case, the conclusion of the Tribunal is unassailable." 31. He referred to another decision of the Supreme Court in the case of Collector of Central Excise v. M/s. Fine Marble & Minerals (Pvt.) Ltd. in which it was decided by....
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.... approx half inch width on semi-automatic machine. These reels are known as "Pancakes". These pancakes are being taken to the loader and the required length of the tape is being wound on the hub, of V-O and V-O is assembled resulting in manufacture of complete 'Video Blank Cassette'. We do not manufacture any plastic part of V-O but buy the same from the open 'market. 36. In the note enclosed with the letter claiming exemption from licensing control the appellants have further stated that:-. "(a) cutting, slitting or sizing is not manufacture and since they are only converting bigger size jumbo rolls to smaller size pancakes by only slitting process, it does not amount to manufacture. (b) "manufacture" cannot be said to have taken place unless the goods cease to be of one taxable description and become those of a different taxable description. Therefore, so long as goods continue to fall under the same sub-item, it cannot be said that manufacture has taken place because there cannot be two manufactures attracting two different stagers under the same item or sub-item. (c) Mere change in physical form or shape of a substance or of a commodity would not, by itself, lead....
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.... in creation of a new article because both - the jumbo roll as well as the pancake - are different forms of video tape which is what is specified as an excisable commodity under sub-heading 8523.13. The two Trade Notices have been cited in support of their claim. The department's contention, on the other hand is that "pancakes" are different from "jumbo rolls" not only in name but also in their use, even if they are two forms of video tapes. As long as these are specified in the sub-heading of the tariff schedule, they become liable to duty because 'manufacture' takes place from one form to another. The Trade Notices were issued before the Tariff Heading 8523 was split up into sub-headings in 1988 by which specific form of video tapes have been incorporated. The clarification given in the Trade Notices are, therefore, no longer applicable. The orders of Collector of Central Excise (Appeals), Bombay, dated 19th January 1989 in the case of Inter Trade Electronics (Pvt.) Ltd., Bombay holding that slitting of jumbo rolls of audio/video magnetic tapes into "pancakes" did not amount to manufacture related to the tariff sub-heading 8523.00 before it was split up, and is no longer applicab....
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.... Dipen Textiles (P) Ltd. 204, Parekh Market, 39 Kennedy Bridge, Opera House, Bombay 400 004, has filed the declaration in the month of April, 1989 required under Notification No. 11/88-C.E.(N.T.) dated 15-4-1988 for having out of licensing control for the year 1989-90. In the declaration they have shown the value of goods declared in 1988-89 for the goods cleared for home consumption as under of :- (1) Pancakes - Rs. 9,50,118.10 (2) Cassettes - Rs. Nil This is to state that'under the present Central Excise Rules, they are not required to obtain Central Excise Licence. Sd/- Illegible." 40. It has been stated in, the appellants' letter, dated 20th April 1989 that a certificate is required to be submitted to the Joint Chief Controller, Imports & Exports, Bombay for issuance of Advance Licence for importing 1,500 jumbo rolls and exporting 30,500 pancakes. This statement itself would show that pancakes which are required to be exported are marketable commodity and, if these were not so, they could not be exported. Similarly, the second document - namely, the certificate - makes it clear that during 1988-89 the appellants had cleared pancakes valued at Rs. ....