TaxTMI 
TaxTMI 
2012 (1) TMI 27
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....t and therefore, is not exigible to Excise duty under the Act. 2. Since these three appeals involve a common question of law, these are being disposed of by this common judgment. However, in order to appreciate the controversy, the facts emerging from C.A. Nos. 4055-4056 of 2009, which was treated as the lead case, are being adverted to. The respondent in this appeal (for short "the assessee") is engaged in the supply of Polymer Modified Bitumen (for short "PMB"). We may note that in one of the appeals (C.A. No. 5633/2009), the assessee additionally supplies Crumbled Rubber Modified Bitumen (for short "CRMB"), stated to be a different kind of modifier. The assessee entered into a contract with one M/s. Afcons Infrastructure Ltd. (for short "Afcons") for supply of PMB at their work site at Solur Village, Viswanathpura Post, Bangalore. As per the agreement, the base bitumen and certain additives were to be supplied by Afcons to the assessee directly at the site, where the assessee, in its mobile polymer modification plant, was required to heat the bitumen at a temperature of 160°C with the help of burners. To this hot bitumen, 1% Polymer and 0.2% additives were added u....
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....he market as it is fit for use only in a molten condition, at a temperature around 160°C and resultantly cannot be stored unless kept in continuous agitated state @ 100°C so as to avoid separation of polymer and bitumen; the process carried out by the assessee does not amount to manufacture. A similar view has been expressed by the Tribunal in other orders which are the subject matter of these appeals by the revenue. 5. Mr. Arijit Prasad, learned counsel appearing for the revenue, vehemently argued that having regard to the nature of the process involved, PMB and CRMB are different from bitumen. According to the learned counsel, ordinary bitumen is heated upto a temperature of 200°C, in the Polymer modification plant; to this heated mixture, polymer is added and samples are taken; if the samples, are found to be satisfactory, additives are added and the PMB is either stored or dispatched. It was submitted that the end products, viz. PMB and CRMB are different from bitumen, inasmuch as polymers and additives are the raw materials consumed in the process of manufacture of the said final products and are therefore, covered by the definition of the term "manufacture....
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....sel vehemently argued that the mechanical process of adding polymer and additives to heated bitumen to bring into existence the so-called new substance, known as PMB, did not amount to 'manufacture' in terms of Section 2(f) of the Act. It was explained that by the said process, only the grade or quality of bitumen is improved by raising its softening point and penetration, for improving the quality of the road; but even with the improved quality, bitumen remained bitumen with the same end use. It was the say of the learned counsel that a mere improvement in the quality did not amount to manufacture, as 'manufacture' takes place only when there is a transformation of raw materials into a new and different article, having a distinctive name, character and use, which is not the case here as the end use of both the articles remained the same. In support of the proposition, learned senior counsel commended us to a plethora of decisions of this Court, including M/s. Tungabhadra Industries Ltd. v. The Commercial Tax Officer, Kurnool, 1961 (2) SCR 14 : AIR 1961 SC 412; Commissioner of Central Excise, Gujarat v. Pan Pipes Resplendents Limited, (2006) 1 SCC 777 = 2006 (193) E.L.T. 129 (S.C.)....
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....2(f) of the Act. 10. It was argued that merely because bitumen (the basic material) and PMB (the end material) are specified under two different headings, it cannot be presumed that the process of obtaining PMB automatically constituted manufacture, unless in fact there has been a transformation of bitumen into a new and different product or alternatively, the Section Notes or Chapter Notes created a deeming fiction by providing an artificial or extended meaning to the expression 'manufacture' in respect of the goods in question. In support of the proposition, learned counsel placed reliance on the decisions of this Court in S.R. Tissues Pvt. Ltd. (supra), Commissioner of Central Excise, Chennai-II v. Tarpaulin International, 2010 (256) E.L.T. 481 (S.C.); Shyam Oil Cake Ltd. (supra), Commissioner of Central Excise, Mumbai v. Lalji Godhoo & Co., 2007 (216) E.L.T. 514 (S.C.); Commissioner of Central Excise v. Indian Aluminium Co. Ltd., (2006) 8 SCC 314 = 2006 (203) E.L.T. 3 (S.C.) and Hindustan Zinc Ltd. v. Commissioner of Central Excise, Jaipur, (2005) 2 SCC 662 = 2005 (181) E.L.T. 170 (S.C.), wherein it was held that merely because the raw materials and the finished product....
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....rwent any change in its characteristics so as to acquire a new commercial identity. In support, learned counsel referred to McNicol & Anr. v. Pinch, 1906 (2) K.B. 352, wherein Darling J., delivering the concurring majority opinion observed that : "You can only make one thing out of another. I think the essence of making or of manufacturing is that what is made shall be different thing from that out of which it is made." In other words, the counsel submitted that the same test namely, whether the product that emerges is something different from the goods with which it is made, was observed to be the determining factor. If bitumen, after its processing with additives and modifiers, remains bitumen; although it is known as PMB, then no new product emerges. It was asserted that in the present case, the revenue had failed to prove that with the addition of polymer or additives, bitumen had undergone any change in its chemical composition and commercial identity. According to the learned counsel, if the treated bitumen is not kept at a particular temperature, bitumen and polymer get separated and revert to their original state, which shows that no chemical reaction takes place when....
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....table oil. Even after the refining, it remains edible vegetable oil. As actual manufacture has not taken place, the deeming provision cannot, be brought into play in the absence of it being specifically stated that the process amounts to manufacture." 17. Then again, in S.R. Tissues Pvt. Ltd. (supra), a question arose whether slitting and cutting of toilet tissue paper on aluminium foil amounted to manufacture under Section 2(f) of the Act. Answering the question in the negative, this Court had observed thus :- "15 In order to make Section 2(f) applicable, the process of cutting/slitting is required to be recognized by the legislature as a manufacture under the chapter note or the section note to Chapter 48. For example, the cutting and slitting of thermal paper is deemed to be "manufacture" under Note 13 to Chapter 48. Similarly, Note 3 to Chapter 37 refers to cutting and slitting as amounting to manufacture in the case of photographic goods. However, slitting and cutting of toilet tissue paper on aluminium foil has not been treated as a manufacture by the legislature. In the circumstance, Section 2(f) of the Act has no application." 18. In the present case....
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....ation through oxidation is increased, it should be held not to be oil." (Emphasis supplied by us) 20. In Delhi Cloth & General Mills Co. Ltd. (supra), yet another Constitution Bench, exploring the concept of manufacture echoed the following views : "14 ......The word 'manufacture' used as a verb is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some change in a substance", however minor in consequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26, from an American judgment. The passage runs thus :- "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 is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." (Emphasis supplied by us) 21. In S.R. Tissues Pvt. Ltd. (supra), the issue for consideration was whether the process of unwinding, cutting and slitting to sizes of jumbo rolls into toilet rolls, napkins and fa....
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.... amount to manufacture. Both the lower authorities have found as a fact that the said process merely resulted in the improvement of quality of bitumen. Bitumen remained bitumen. There was no change in the characteristics or identity of bitumen and only its grade or quality was improved. The said process did not result in transformation of bitumen into a new product having a different identity, characteristic and use. The end use also remained the same, namely for mixing of aggregates for constructing the roads. 24. We also find substance in the contention urged on behalf of the assessee that the answer to the issue at hand stands concluded by the dismissal of the Civil Appeals filed by the revenue against the decision of the Tribunal in the case of Collector of Central Excise, Vadodara v. Tikitar Industries, 2000 (118) E.L.T. 468 (Tri.). In that case the dispute was whether the process relating to improvement of the quality of bitumen by raising its softening point and penetration amounted to manufacture of a new and different commodity. The process involved in improving the quality of bitumen was oxidation, which converted straight grade bitumen into air blown bitumen. In ....