TaxTMI 
TaxTMI 
2007 (9) TMI 123
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....ty as the appellants believed that the process of coating coal tar enamel or polyethylene on bare MS pipes did not amount to "manufacture". The department took the view that the said process amounted to "manufacture" as it gave rise to a new product with name, character and use distinctly different from the bare pipes. Accordingly, show cause notice dated 7-3-2006 was issued to the appellants demanding duty of over Rs. 24 crores along with education cess of over Rs. 49 lakhs front the appellants in respect of the coated pipes supplied to M/s. IOCL during the above period. The SCN alleged, inter alia , that the appellants had, with intention to evade payment of duty, wilfully suppressed before the department the fact that they had carried ou....
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....ure" only w.e.f. 184-2006 with the amendment to Chapter Note 5 and hence the coated pipes were not excisable prior to 18-4-2006; that, in the case of a subsidiary company of the appellants, this Tribunal had held that epoxy coating of steel bars would not amount to "manufacture" since such coating was merely anti corrosive; that the classification by the department of the coated pipes under Heading 73.04 was incorrect; that the entire demand was barred by limitation inasmuch as the allegation of wilful misstatement/suppression of facts with intent to evade payment of duty was baseless; that it was not correct to have raised that above demand without taking into account the reversal of Cenvat credit; and that neither any penalty was imposabl....
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.... E.L.T. 103 (Tri-Del.) (6) Murarjee Goculdas Spg. & Wvg. Co. Ltd. v. CCE, Mumbai - 2004 (172) E.L.T. 35 (Tri.-Mumbai) (7) Indian Oil Corporation Ltd. v. CCE, Mumbai - 2005 (190) E.L.T. 408 (Tri.-Mumbai) Ld. counsel also referred to the Apex Court's judgments in UOI v. DCM Ltd., 1977 (1) E.L.T. (J 199) ES.C.] and UOI v. J.G. Glass Industries Ltd., 1998 (97) E.L.T. 5 (S.C.) as also to certain decisions of the Tribunal, in the context of arguing that the coating of MS pipes with enamel or plastic material did not yield any different product and hence did not amount to "manufacture" within the meaning of this term under Section 2(f) of the Central Excise Act. He also referred to certain judgments of the Apex Court (in Income Tax cases), afte....
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....a) cleaning of the bare pipes by shot blasting (b) application of primer and (c) melting of coal tar enamel and coating the same. It is not in dispute that bare MS pipes received by the appellants were classified under Heading 7306 by the manufacturer of those pipes There was no classification dispute between the department and the manufacturer of the bare MS pipes. These pipes were required by M/s IOCL for transportation of petroleum products from one place to another. The pipes were to be laid in the earth and some times under water also, As bare pipe were prone to corrosion/rust, they required to be given a suitable protective coating. Coal tar enamel coating was given where the pipes were intended to be laid in the earth. Polyethylene c....
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....t. It is also pertinent to note that none of the relevant entries in the Tariff (Heading 73.04, 73.05, 73.06) made any distinction between bare tubes/pipes and coated tubes/pipes during the material period. 7. The lower authority is seen to have relied on Notes 4 & .50 Chapter 73 of the First Schedule to the Central Excise Tariff Act. Chapter Note 4 says that, in relations to the products of Chapter 73, the process of galvanization shall amount to "manufacture". Galvanization is the process of coaling iron or steel with a layer of zinc. Chapter Note 4 is, therefore, not relevant to the present case. Chapter Note reads as follows :- In relation to the pipes and tubes of heading Nos. 73.04 and 73.05, the proc ess of coating with cement of p....
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.... did not amount to "manufacture" till the insertion un 2000] of Note 9 to Chapter 27 of the said Schedule. Thus it is settled law that there is no deemed "manufacture" prior to introduction of 'deeming provision' in the First Schedule to the Central Excise Tariff Act. Therefore, in the present case, prior to 18-4-2006, the process of coating MS pipes of Heading 73.06 with cement or polyethylene or other plastic material did not amount to "manufacture". 7.Ld. SDR has made an endeavour to show that the appellants them selves had classified 'spiral welded pipes' under Heading 73.05 and, therefore, the ERW (electrical resistance welded) pipes received by them from M/s. IOCL during the period of dispute could also be classified under the above ....