TaxTMI 
TaxTMI 
TaxTMI 
2002 (12) TMI 519
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....ng the recovery of the duty amount but there is no specific order regarding stay of the penalty. 2. Shri. V. Sridharan, learned Advocate for the appellant argued the case at length and made detailed submissions to the following effect :- "A.1 The activity undertaken is of mere slitting of the flat rolled products, namely, HR coils, CR coils and SS coils of width more than 600 mm. The slit products were either of more than 600 mm. width or of less than 600 mm. width. A.2 Vide circular dated 7-9-2001, the revenue has not disputed the position that when the slit products are of more than 600 mm, the process of slitting the coils would not amount to manufacture since the starting materials is coil of width more than 600 mm. and the slit product is also of width 600 mm. In other words, even according to the revenue itself the process of slitting had not resulted in emergence of new product with distinct name character or use when the slit coil is of more than 600 mm. width. If that is the case when the slit coil is of width more than 600 mm, the position cannot be different if the slit coil is of width less than 600 mm. A.3 The activity undertaken is slitting alo....
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....e market, liable to duty....." B.3 Thus, in order to treat a process as amounting to manufacture, new and different article must emerge having distinct name, character and use. As submitted above, the slit HR coils, CR coils and SS coils did not have distinct name, character or use. They are also called HR coils, CR coils and SS coils. By mere slitting and cutting of these coils, no character of the same would change. The use of the product also remains the same. Hence, the process of slitting does not amount to manufacture. B.4 When the tariff classifies flat rolled products of iron or non-alloy steel of a width 600 mm or more under Heading 72.08 and the flat rolled products of iron or non-alloy steel of width less than 600 mm. under Heading 72.11, it would only mean that if a manufacturer manufactures flat rolled products of width more than 600 mm and after slitting the same into flat rolled products of width less than 600 mm such manufacturer has to pay duty at the rate applicable to the flat rolled products of width less than 600 mm. It does not mean that if a person buys duty-paid flat rolled products of width more than 600 mm and slits the same into fiat rolled pr....
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....d it can be used again for recording other sound. 8. We are in agreement with the view taken by the dissenting Member, and in M. Basheer Ahammed's case, that no process of manufacture is involved as aforesaid. B.6 The same view was taken in the following cases (a) 1998 (97) E.L.T. 5 (S.C.) - UOI v. J.G. Glass Industries Ltd. (b) 1998 (29) RLT 222 (Tri.) - Garware Polyester Ltd. v. CCE (c) 1991 (52) E.L.T. 392 (Tri.) - Rexor India Ltd. v. CCE Affirmed by Supreme Court on 17-8-95 B.7 The aforesaid submission is also supported by the following decisions wherein it has been held as under :- (a) Computer Graphics Pvt. Ltd. v. UOI [1991 (52) E.L.T. 491] "9. The main question for consideration is, whether the petitioner carries on any manufacturing process? It has already been seen that what the petitioner does is to import jumbo rolls of graphic art films and it cuts these films into sheets of various sizes, which are thereafter packed and sold in the ma....
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....03, subject to applicable Exemption Notification, if any. Similarly, if they had carried out the same process and cleared the resultant tissue paper in rolls not exceeding 36 cm. In width, duty would have been leviable on the product in terms of TH 48.18, subject to applicable Exemption Notification, if any. This is all what was meant by the legislature when it classified the jumbo rolls under TH 48.03 and the rolls of width not exceeding 36 cm. Under TH 48.18. Had the legislature intended that the mere activity of slitting and cutting jumbo rolls of duty-paid tissue paper into smaller sixes and packing the products for sale in the market should also be excisable, it would have enacted such intent into law through appropriate Section Note or Chapter Note in the Central Excise Tariff. Such Section/Chapter Note is conspicuously absent in the Tariff. Therefore, it has to be held that the existence of a separate Tariff Entry (TH 48.18) for the facial tissues, napkins etc. would not, by self make these products excisable. The apex court's decision in Prabhat Sound Studios (supra) is supportive of this view. 8.3 Their Lordships of the apex court, in the above case, were considering....
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....nal no doubt had before it, the case pertaining to the period when old tariff was existing but what the Tribunal decided was about manufacture. We also note that in the case of Systems Packaging, identical facts were before the Tribunal when the Tribunal held that slitting of jumbo rolls into smaller rolls does not amount to manufacture. Following the decision in these two cases, we hold that slitting of jumbo rolls of thermal paper into smaller rolls does not amount to manufacture." C. The decision of the Supreme Court in the case of Lal Woolen and Silk Mills (P) Ltd. - 1999 (108) E.L.T. 7 proceeds on the basis that the grey yarn and dyed yarn are specified under two different tariff item and this itself recognises that they are two different goods. However this decision did not consider the earlier decision of three members bench decision in the case of Moti Laminates Pvt. Ltd. v. CCE - 1995 (76) E.L.T. 241 (S.C.) wherein at Para 6 it was held that where the goods are specified in the Schedule of the Central Excise Tariff they are excisable but whether such goods can be subjected to duty would depend on whether they were produced of manufactured by the person on whom duty i....
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....he following decisions of the Supreme Court : (a) 1995 (76) E.L.T. 241 (S.C.) - Moti Laminates Pvt. Ltd. v. CCE - Paras 6, 7 and 11 (b) 1999 (108) E.L.T. 321 (S.C.) - Constitution Bench Hyderabad Industries Ltd. v. UOI - Paras 5 and 8 (c) 2001 (130) E.L.T. 401 (S.C.) - Constitution Bench CCE v. Man Structurals Ltd. D.4 The decision of the Supreme Court in the case of Lal Woolen - 1998 (108) E.L.T. 7 (S.C.) did not refer to the above decisions mentioned in (a) and (b). Hence, the decision in Lal Woolen is not a good law. D.5 The decision of the Supreme Court in Moti Laminates is binding since it of a larger bench when compared to the bench which decided the Lal Woolen Silk Mills case. This submission is fully supported by the decision of the Supreme Court in the case of UOI v. Raghubir Singh - 1989 (2) SCC 754 = AIR 1989 S.C. 1933 and another decision of the Supreme Court in the case of Mahanagar Railway Vendor's Union - 1994 Supp (1) SCC 609. E. The test of "manufacture" is emergence of new and distinct comm....
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....Central Excise v. Kapri International (P) Ltd. [2000 (142) E.L.T. 10 (S.C.)] is also cited before us where the Hon'ble Court held that where the activity amounted to manufacture it was not material whether the resultant parts continued to fall under the same tariff entry as the parent product. 14. Thus the combined reading of the judgments would indicate that what is required to be shown is the fact of "manufacture" having taken place resulting in the creation of a new product distinctly known commercially in the market, to attract fresh levy. The question whether the first product and resultant products fell under the same tariff entry or different is not germane to the issue of leviability of the resultant product to duty. 15. Since the goods after slitting continued to be known by the same nomenclature in the market, the test of "manufacture" as envisaged by the Supreme Court is not fulfilled. As a result the appeal of the assessees succeed and are allowed." 5. Shri M.H. Shaikh, learned J.D.R. appearing for the Revenue stated that after slitting, the tariff items changed and therefore duty is payable again. He also drew attention to Para 3 of the impugned adjud....
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....e to in each case determine whether the processes that resulted in the change of classification also meets the test of manufacture and marketability. This would be not easy task and there will be no end to litigation apart from the fact that the tariff would cease to be a guide to determining dutiability of a product. If the learned Advocate's further contention that strips produced out of sheets in an integrated factory would pay duty as strips but strips produced by independent converters out of duty paid sheets would pay no further duty at the strip stage is considered, this would introduce inequity in the matter of excise taxation. Strips produced by two different producers would be charged to different amounts of duty causing unintended market distortion. 9. Out attention has been drawn by the learned advocate to the recent decision of CEGAT dated 1-10-2002 in the case of M/s. BEMCEE. While proceeding on the premises that the product is described as flat rolled product even when the tariff sub-heading changes (Para 12), the decision notes later on that since the goods after slitting continued to be known by the same nomenclature in the market, the test of manufacture is ....