TaxTMI 
TaxTMI 
TaxTMI 
2005 (9) TMI 82
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....S for venetian blinds. The officers found that the goods in transit did not suffer excise duty and accordingly, they seized the vehicle on a reasonable belief that the goods in transit were excisable goods under chapter sub-heading 7616.90. On 9-11-1994, as a follow-up of the seizure, the officers visited the premises of M/s. Aldec Corporation and also premises of M/s. VPI and M/s. SREW under the authority of the search warrant. As a follow-up, the department issued show-cause notice on 27-3-1995 alleging purchase of aluminium sheets from M/s. Hindalco Industries Ltd. and paint from M/s. Goodlass Nerolac Paints Ltd., which, the department alleged, was being used in the manufacture of PAS for venetian blinds measuring 50 mm x .23 mm and 25 mm x .23 mm, running into mill length (over 100 ft.). According to the show cause notice, M/s. Aldec Corporation bought aluminium sheets in coil form measuring 472 mm x 2.03 mm and in turn forwarded the said aluminium sheets to M/s. VPI (job processor) which in turn forwarded the aluminium sheets to SREW (job processor) for slitting and re-rolling the above sheets into slats of 50 mm x .23 mm and 25 mm x .23 mm running into more than 100 ft. M/s. ....
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.... Corporation was not a trader; that it was in fact a processor and that M/s. Aldec Corporation had resorted to the aforestated modus operandi with the intention to evade excise duty by fragmenting the aforestated different and distinct activities which if taken together resulted in the manufacture of an independent identifiable product, namely, Painted Aluminium Slat (PAS), classifiable as a separate article under chapter sub-heading 7616.90. From the show-cause notice, one finds that in the year 1986, M/s. VPI was asked by the Superintendent to apply for Central Excise Licence and to follow Central Excise procedures. Being aggrieved, M/s. VPI had filed a writ petition in the High Court of Andhra Pradesh. That writ petition was disposed of on 10-6-1987 directing M/s. VPI to approach the collector. Similar immunity was also claimed by M/s. SREW. The Collector upheld the contentions of M/s. VPI and M/s. SREW holding that painting of aluminium sheets did not amount to "manufacture". The Additional Collector also came to the conclusion that the slitting of aluminium sheets did not amount to "manufacture". Consequently, the Additional Collector took the view that the aluminium sheets re....
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....e was erroneous because it ignored the previous binding orders of the Additional Collector and the Commissioner (Appeals) stating that the activities carried by M/s. VPI and M/s. SREW did not amount to "manufacture". It was contended that M/s. Aldec Corporation was a trader in aluminium strips in the coil form and that the department was always aware of its activities as a trader. According to M/s. Aldec Corporation, there was no difference between Tariff Item 27(6) and Tariff Item 68 (which existed prior to 28-2-1986) on one hand and Tariff Item 76.06 as well as chapter sub-heading 7616.90 under the Central Excise Tariff Act, 1985 on the other hand and, therefore, the decision taken by the department in 1986 was irreversible. In the reply, M/s. Aldec Corporation contended that M/s. VPI and M/s. SREW were job processors, which position was accepted by the department in its earlier decisions in 1986/1987 and, therefore, it was not open to the department in the year 1995 to contend that the slats were now classifiable under sub-heading 7616.90. According to M/s. Aldec Corporation, the business of the corporation was trading and, therefore, it was not required to obtain licence or reg....
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....missioner confirmed the demands raised by the department in the show-cause notices. It was held that at the relevant time, the aluminium sheets measuring 472 mm x 2.03 mm thickness were classifiable under chapter sub-heading 7606.20 whereas other articles of aluminium as final product were classifiable under chapter sub-heading 7616.90. According to the Commissioner, the process of slitting, rolling and trimming by M/s. SREW constituted "manufacture" because at that stage, the width of the original aluminium sheets bought from M/s. Hindalco was slitted to smaller sizes and reduced in thickness as indicated in the above dimensions, which resulted in a separate, independent identifiable product known in the market as aluminium slats. According to the Commissioner, M/s. Aldec Corporation had used slitting and rolling machines in the course of the aforestated activities, which resulted manufacture of a finished product known as 'painted aluminium slat' for venetian blinds. The Commissioner further found that the real manufacturer of the aforestated processes was M/s. Aldec Corporation and not M/s. VPI and M/s. SREW. The Commissioner examined various documents, balance-sheets, income ex....
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....ting of sheets into strips did not amount to "manufacture". The Tribunal further held that M/s. VPI did painting on strips which did not amount to manufacture. The Tribunal found that the issue involved in the present case stood decided as far back as 27-8-1987 vide order of the Commissioner holding that the painting activity carried out by M/s. VPI did not amount to "manufacture". Similarly, as far back as 26-11-1986, the Collector had held that the activity of slitting and rolling did not amount to "manufacture". According to the Tribunal, both the decisions dated 26-11-1986 and 27-8-1987 were accepted and, therefore, the department has no authority to claim recovery of duty from M/s. Aldec Corporation commencing from April 1990. In the impugned judgment, the Tribunal held that the earlier decisions dated 26-11-1986 and 27-8-1987 did not change with the introduction of the new tariff w.e.f. 28-2-1986 particularly when the processes carried out since 1985 remained unchanged. The Tribunal observed that in the impugned decision of the Commissioner, there is no discussion as to how painted aluminium slats for venetian blinds fell under chapter sub-heading 7616.90 and, therefore, the ....
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....ing to the department, if one looks to the totality of all the above activities taken, individually and/or jointly, would result in the manufacture of a different, independent identifiable product known in the market as PAS for venetian blinds. According to the learned Counsel, in view of the aforestated circumstances, the decisions earlier taken in 1986/1987 by the department were not binding on the department. It was urged that in the present case, we are concerned with the concept of "manufacture" both on first principles as well as under Section 2(f) of the Act, which has not been examined at all by the Tribunal. Learned Counsel submitted that the issue of classification was different from the issue of excisability. Learned Counsel submitted that this difference has not been looked into by the Tribunal. Therefore, learned Counsel urged that the impugned decision is erroneous and liable to be set aside. Learned Counsel submitted that the thickness of aluminium sheets was ten times more than the thickness of the strips; that there is value-addition in case of PAS for venetian blinds; that the process of slitting, trimming and re-rolling changed the structure of the original alumi....
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....own as "painted slats for venetian blinds". It was urged that the onus of establishing "manufacture" as also "classification" was on the department; that the department had failed to discharge its onus; that the Commissioner had made repeated assertions without any supporting evidence. Learned Counsel submitted that the prior history of adjudication in this regard shows that the burden was on the department in the present case on the heavier side to show that the slitting, rolling, and painting resulted in emergence of a new product, both in terms of "manufacture" and in terms of "marketability". Reliance was also placed on Chapter note (d) to Chapter 76 which indicated that the aluminium strip remained classified under Heading 76.06 notwithstanding the processing of such strip in the manner contemplated by the note. Learned Counsel submitted that the strips sold by M/s. Aldec Corporation continued to be classified under Heading 76.06 and became an article of aluminium only when the venetian blinds were manufactured by the buyers. Learned Counsel urged that the tariff heading made no difference between a polished or a coated strip vis-a-vis unpolished or uncoated strip and, therefo....
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....d. reported in AIR 1984 SC 420. Therefore, under the Excise law, chargeability, classification, valuation and exemption are different and distinct concepts. In the case of Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad reported in 1995 (76) E.L.T. 241, this Court has held that Section 3 levies duty on all excisable goods, provided they are manufactured or produced. Therefore, where the goods are specified in the Schedule, they are excisable goods but whether such goods can be subjected to duty would depend on whether they were produced or manufactured by the person on whom duty is proposed to be levied. The expression "produced or manufactured" has been explained to mean that the goods so produced must satisfy the test of marketability. Therefore, it is open to an assessee to prove that even though the goods in which he is carrying on business is excisable, being mentioned in the Schedule, it could not be subjected to duty if it does not constitute "goods", either because they are not produced or manufactured or if they have been produced or manufactured, they were not marketed or capable of being marketed. In short, the twin test contemplated by the Excise law ....
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....article is capable of will be relevant. [See : Airgrill Industries v. Commissioner of Central Excise reported in 2001 (132) E.L.T. 646 (T) affirmed by this Court in 2002 (141) E.L.T. A90]. Lastly, the question whether a process, taken singly or jointly, constitutes "manufacture" on first principles or under Section 2(f) has to be determined having regard to the facts and circumstances of each case. The definition of "manufacture" as per Section 2(f) includes any process incidental or ancillary to the completion of a manufactured product. For example, painting of steel furniture is incidental or ancillary to the manufacture of steel furniture. But if the steel furniture is sold without painting and if painting is done after the furniture is sold then painting will not amount to manufacture. 10.Applying the above tests to the facts of the present case, we find that Note 2 to Section XV, under which Chapter 76 falls, has not been considered. Similarly, Section 2(b) of Section XVI of the HSN has not been considered. Further, the functional utility of PAS as deflector of air-flow has not been considered. The issue as to whether the PAS in question was for general purpose or was user sp....