TaxTMI 
TaxTMI 
2006 (3) TMI 2
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....ture; or] 3.The word "manufacture" is a compound word of Latin origin derived from the words "manu," by hand and "facere," to do, to make, to form; but the meaning is not confined to that which is done by hand alone, but by machinery as well. (In Re : Tecopa Min. Etc., Co. - 110 Fed 120, 121). 4.The following passage in the Permanent Edition of Words and Phrases was referred to with approval in Delhi Cloth and General Mills. - AIR 1963 SC 791 at page 795 : '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. 5.Our endeavour in the instant case would be to examine the activity of the appellant in the light of legislative intention as encompassed in the said definition. 6.In these appeals, the appellants have challenged the show cause notice issued by the Additional Collector of Central Excise, Calcutta-I. The said notice was issued on the ground that by the process of "welding" of electric resistant pipes/tubes of diff....
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....f the same class have been grouped together to enable parity in treatment. (d) It contains Section/Chapter notes giving detailed explanation as to the scope and ambit of the respective Section/Chapter. These notes have been given statutory backing and have been incorporated at the top of each Section/Chapter. (e) Special provision has been incorporated in respective Chapters in relation to the goods which poses problem in the matter of levy of excise duty. (f) General residuary Tariff Item 68 has been dispensed with and instead residuary items have been provided separately for each class of goods under each Chapter. (g) Interpretative rules have also been provided to serve as statutory guideline for interpreting the Tariff Schedule. (h) To preserve by and large the existing duty structure to the extent possible. (i) Government will have, for the first time, the power to raise duty through notification in certain circumstances but subject to limits provided in the proposed enactment. (j) &nbs....
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....rly closed) of iron or steel." 13.According to the appellants, the essence of manufacture is the transformation of one item into another for marketable purpose. 14.The appellants submitted that the Additional Collector of Central Excise, Calcutta has erroneously relied upon the judgment of the Central Excise & Gold (Control) Appellate Tribunal (for short CEGAT) in the case of Associated Strips Pvt. Ltd. v. Collector of Central Excise. This judgment has been overruled by a judgment of this Court dated 22-7-1991 passed in Civil Appeal No. 6212 of 1990 filed by the Associated Strips Pvt. Ltd. The respondent Department is seeking to classify the poles manufactured by the appellants under Tariff Item 7308.90 which is a Residuary Entry under Heading 73.08 pertaining to Structures. According to the appellants, the respondent Department has not discharged the burden of proving how the poles fall under Residuary Entry of Structures by mere process of welding. The burden to prove manufacture is always on the Revenue, as has been held by this Court in a series of cases and reiterated in a recently decided case Shyam Oil Cake Ltd. v. Collector of Central Excise, Jaipur reported in 2005 (....
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.... This is a new product viz. "Steel Tubular Poles" has emerged out of the steel pipes (E.R.W. Tubes) as stated aforesaid which is a manufactured product within the meaning of definition of "manufacture" as given in Section 2(f) of the said Act." 16.The appellants immediately had sent reply to the said notice. The relevant portion of the reply reads as follows : "2.4.It was ascertained from a statement given by us on 20-12-1988 that the process of manufacture of the Poles is as follows :- E.R.W. Tubes of different dia reduced at one end to require smaller dia by red hot heat where in the tube of the smaller dia is inserted through manual hammering in three section, where-after the joints at the entering points are swaged to give a circumferential grip with a surface inclination of 45 to shad water. Power is used in cutting the pipes of bigger length into smaller lengths. The resultant product, via, Pole thus emerges out as a new article involving process of manufacture within the meaning of Section 2(f) of the Act. 2.5.Even though the joints of the three sections of the Pole are welded during the course of making the joints and the resultant Pole is painted by using of pa....
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....ese products are generally used by the telephone and telegraph departments of the Government of India, but can also be used for purposes of transmission and lighting. After Tariff Item 26-AA was introduced w.e.f. 24-4-1962 in the First Schedule to the Central Excise and Salt Act, 1944 the Government of India issued a notification dated 1-3-1963 under Rule 8 of the Central Excise Rules by which "telegraph, telephone and electric lighting and transmission poles falling under Item 26-AA of the First Schedule of the Act" were declared completely exempt from the duty. Accordingly, the appellant was not allowed to pay duty on the goods right from 1962 till 1975. On 1-3-1975, the legislature introduced Tariff Item 68 in the First Schedule to the Act covering "goods not elsewhere prescribed". Thereafter, the Superintendent of Central Excise took the view that the poles in question manufactured by the appellant were classifiable not under Item 26-AA but under Item 68 of the Central Excise Tariff and that, therefore, the appellant was liable to pay duty on all goods manufactured by it from 1-1-1975 till the date of the notice. 20.Tariff Item 26AA was introduced w.e.f. 24-4-1962 in the Fir....
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....t, therefore, a sound objection. In regard to the second point, it is perhaps sufficient to point out that sub-item (iv) of Item 26-AA refers to pipes and tubes (including blanks thereof) all sorts, whether rolled, forged, spun, cast, drawn, annealed, welded or extruded. It is comprehensive enough to take in all sorts of pipes and tubes and even those obtained by the processes of forging, drawing and so on. The ultimate product in the present case is merely a set of pipes or tubes of different diameters attached to one another by different methods. The so-called manufacture is nothing but the putting together of a number of pipes or tubes by one or other of the processes mentioned in the tariff item. The goods produced, therefore, do not cease to be iron and steel products or pipes and tubes of the description mentioned in Item 26-AA(iv). It may not be also correct to characterize them as a different commercial commodity. Some of them are called poles, an expression which means "a long slender piece of metal or wood commonly tapering and more or less rounded". Electric poles, being hollow ones, are not much different from pipes or tubes. The statement that they are commercially dis....
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....decide the meaning of expression 'manufacture'. The Court held that 'manufacture' which is liable to excise duty under the Central Excise and Salt Act, 1944, must therefore be the "bringing into existence of a new substance known to the market". 26.In another Constitution Bench of this Court in Devi Dass Gopal Krishnan & Ors. v. The State of Punjab & Ors. reported in Sales Tax Cases XX (1967) page 430, the Court relied on the dictionary meaning of 'manufacture' and according to Court 'manufacture' means 'transform or fashion raw materials into a changed form for use'. The Court observed that if by a process a different identity comes into existence then it can be said to be 'manufacture'. 27.In Empire Industries Ltd. v. Union of India - AIR 1986 SC 662, it was observed that manufacture is complete as soon as by the application of one or more processes, the raw material undergoes some change. If a new substance is brought into existence or if a new or different article having a distinct name, character or use result from particular process, such process or processes would amount to manufacture. Whether in a particular case manufacture has resulted by process or not would depen....
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.... were wires and merely because they were covered by two separate entries did not mean that the product was excisable. It was held that in the absence of any manufacture the product did not become excisable merely because there were two separate entries. 33.In the case of Metlex (I) (P) Ltd. v. CCE reported in (2005) 1 SCC 271, this Court observed that the entry makes no distinction between ordinary film and film which is lacquered or metallised or laminated. The Court arrived at a definite conclusion that a film remained a film and no new or distinct product has come into existence. 34.In Aman Marble Industries (P) Ltd. v. CCE reported in (2005) 1 SCC 279, the question arose whether cutting of marble slabs amounted to manufacture for the purpose of Central Excise Act. This Court observed that after the activity is completed a marble would remain marble. Therefore, this activity did not attract the tax. 35.In Rajasthan SEB v. Associated Stone Industries reported in (2000) 6 SCC 141, this Court observed that the word 'manufacture' generally and in the ordinary parlance in the absence of its definition in the Act should be understood to mean bringing to existence a new and di....