TaxTMI 
TaxTMI 
2001 (2) TMI 138
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....aid sheets and zinc from domestic market and undertakes the activity of galvanisation and corrugation on the said sheets. In 1998, it applied for registration under the Act. The competent authority issued registration certificate on 29-4-1998. On that very day, the petitioner's representative submitted letter to respondent No. 5 for withdrawal of the registration by contending that in view of the law laid down by the Supreme Court in M/s. Gujarat Steels Tubes Ltd. v. State of Kerala, 1989 (42) E.L.T. 513 and by the Gujarat High Court in M/s. Zaverchand Gaekwad (P) Ltd. v. Union of India, 1992 (61) E.L.T. 225 and circular No. 19/94/94-C.E., dated 9-2-1994 issued by the Central Board of Excise and Customs, New Delhi (for short, the Board), galvanisation of steel strips does not amount to manufacture within the meaning of Section 2(f) and, therefore, no duty is payable by it. No order appears to have been passed by the concerned authority on that application, but after about 2 years, a team of the officers of Central Excise Department visited the factory of the petitioner and detained 142.260 MT of galvanised corrugated sheets on the ground of violation of Rules 9(1), 33, 173, 174 and....
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.....C. sheets in the market) have a different commercial identity and use and the price thereof is higher than the plain metallic sheets or galvanised metallic sheets. They have further averred that the galvanised plain sheets are commonly used in the manufacture of desert coolers, boxes, trunks etc., whereas the galvanised corrugated sheets are used in roofing, shelter etc. and their classification under the Central Excise Act, 1944 is also different. The respondents have also sought dismissal of the writ petition as pre-mature by asserting that final order has not been passed in pursuance of the show cause notice Annexure R. 1, dated 22-11-2000 issued by the Deputy Commissioner, Central Excise, Chandigarh. 5.The petitioner has filed replication reiterating its plea that the process of corrugation does not amount to manufacture within the meaning of Section 2(f) of the Act. It has also controverted the assertion of the respondents about the price difference between the galvanised sheets and corrugated galvanised sheets by stating that the price shown in invoice No. 152, dated 1-3-2000 (Rs. 20,200/- per MT) relates to defective galvanised sheets which were sold at rate less than no....
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....anised metallic sheets manufactured by it. He further argued that the writ petition should be dismissed as premature because no final order has been passed by the competent authority in pursuance of the show cause notice dated 21-11-2000. 8.Before adverting to the main issue, we consider it appropriate to mention that the respondents have not challenged the petitioner's assertion that in view of the circular dated 9-2.1994 issued by the Board, galvanisation of metallic sheets does not amount to manufacture and, therefore, galvanised metallic sheets cannot be subjected to excise duty. In our opinion, even if the respondents had controverted this plea of the petitioner, we would have granted relief of it in accordance with the Board's circular because it is a settled proposition of law that the circular issued by the Board are binding on the departmental authorities - Ranadey Micronutrients v. Collector of Central Excise (supra) and Steel Authority of India Ltd. v. Collector of Customs, Bombay (supra). 9.The stage is now set for consideration of the main question as to whether the process of corrugation of metallic sheets amounts to manufacture within the meaning of Section 2(f....
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....served as under : "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 sought 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 process. In the case before us, circles in any form are envisaged as the completed product produced by manufacture which are subjected to excise duty. The process of conversion of billets into circles was described by the Legislature itself as manufacture of circles." 14.The Empire Industries Ltd. v. Union of India and others, 1985 (20) E.L.T. 179 (S.C.) = (1985) 3 SCC 314, a three Judges Bench of the Supreme Court considered ....
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....oint where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the process. There might be borderline cases where either conclusion with equal justification be reached. Insistence on any sharp or intrinsic distinction between 'processing' and 'manufacture', results in an over simplification of both and tends to blur their interdependence in cases such as the present one." 16.In Collector of Central Excise v. Rajasthan State Chemical Works, 1991 (55) E.L.T. 444, a three Judges Bench of the Supreme Court examined the same issue in the context of claim for exemption claimed by the respondent from payment of duty in respect of the raw material used for manufacture of crude sodium sulphate. Their Lordships referred to the definitions of the words 'manufacture' and 'process' and held as under : "Clause 2(f) gives an inclusive definition of the term 'manufacture'. According to the dictionary, the term 'manufacture' means a process, which results in an alteration or change in the goods which are subjected to the process of manufacturing leading to the production of a commercial....
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....(Appeals) held that the process undertaken by the respondent amounts to manufacture because a new commodity known to the market emerges as a result of such process. In the appeal filed by the respondent before the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi, the Technical Member accepted the plea of the respondent but the Judicial Member took a contrary view. The matter was then referred to the third Member who, without dealing with the issue discussed by the two Members, upheld the contention of the respondent. The Supreme Court reversed the order of the majority of the Tribunal and remanded the case for fresh adjudication. Their Lordships referred to the decisions in Union of India v. Delhi Cloth and General Mills (supra), Empire Industries Ltd. v. Union of India (supra), M/s. Ujagar Prints v. Union of India (supra) and proceeded to lay down the following proposition : "The decisions aforesaid make it clear that the definition of the expression 'manufacture' under Section 2(f) of the Act is not confined to the natural meaning of the expression 'manufacture' but is an expansive definition. Certain processes, which may not have otherwise amounted to manufactu....
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....c base. Earlier the printing activity was primarily confined to printing of books, literature, newspaper and periodicals etc. The advanced printing industry covers a much wider field of activity that it did in the past. Can we, therefore, say that evry material on which printing work is done becomes a product of the Printing Industry? The answer has to be in the negative. An ordinary carton without any printing on it is a completed product and undisputable the product of the Packaging Industry. The question for our consideration is, does it cease to be the product of Packaging Industry as and when some printing is done on the said carton? We are of the view that to a common man in the trade and in common parlance a carton remains a carton whether it is a plain carton or a printed carton. The extreme contention that all products, on which some printing is done, are the products of the Printing Industry cannot be accepted…… What is exempt under the Notification is the product of the 'Printing Industry'. The 'product' in this case is the carton. The Printing Industry by itself cannot bring the carton into existence. Any amount of fancy printing on a card-board would not make it....
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.... have otherwise amounted to manufacture have also been brought within the ambit of the said definition; (ii) no hard and fast rule can be applied in determining what constitutes 'manufacture' within the meaning of Section 2(f) of the Act, and each case will have to be decided on its own facts but, broadly speaking, the particular activity or process would amount to manufacture if new and different goods emerge having distinctive name, use and character by applying such activity or process; (iii) the moment there is a transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes, the manufacture takes place; (iv) where the change or series of changes brought about by the application of process take the commodity to the point where commercially it can no longer be regarded as the original commodity but is, instead, recognised as a new and distinct article that has emerged as a result of the process; (v)  ....
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....st be admitted that the life of ordinary quality galvanized corrugated steel sheets is only about 25% that of the original iron sheets. Iron sheets, of higher purity than ever, are being made not only in Great Britain but on the Continent and in America, for those who see the wisdom of paying a higher price for an article of longer life, but 95% of the so called 'corrugated iron' is really steel. The corrugating process enables much lighter gauges of sheets to be used because it makes them very rigid and portable. Galvanizing and Corrugating. - The black sheets are first put through the pickling process. This is done in a stone or timber tank which is filled either with sulphuric or hydrochloric acid to remove all scale, oxide or rust. This operation can be carried out either by hand pokers or by an automatic pickling machine. After being cleansed in a water tank, the flat sheets are then fed into the galvanizing bath either by hand or by an automatic feeder, one at a time. The galvanizing bath is made of steel plates from 1 in. to 1-1/2 in. thick and of a size to suit the width of sheets to be treated. Inside the bath there is the galvanizing machine with rollers which revolve ....
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....in a dry, well-ventilated place, and any sheets which have become damp or wet in transit should be wiped thoroughly dry before storing. On no account should they be stored in bundles in a damp atmosphere. If sheets must be stored in the open air or under poor conditions, they should be stacked in such a manner as to allow a good air space between them." 23.From these dictionary meanings and the description of the process of corrugation it becomes clear that corrugation of plain sheets and galvanised sheets brings into existence a new product having an altogether different identity and use. In their written statement, the respondents have also averred that the process of corrugation of metallic sheets leads to the creation of a product which has different commercial identity/name, marketability and use and the cost of the new product is higher than the original one, i.e. metallic sheets/galvanised sheets. The petitioner has controverted the assertion of the respondents about the price of G.C. sheets but no evidence has been placed on record to prove that the price of galvanised metallic sheets/plain sheets is the same as that of G.C. sheets. Therefore, by applying proposition Nos....