1997 (7) TMI 595 - AT - Central Excise

Summary

Issues:
Determining the stage at which duty is chargeable on goods fabricated by the appellant - whether after fabrication or after galvanization.

Analysis:
The appeal before the Appellate Tribunal CEGAT, CHENNAI revolves around the issue of the appropriate stage at which duty should be charged on goods fabricated by the appellants. The appellants fabricate certain goods and subsequently subject them to the process of galvanization. The lower authority held that duty should be chargeable after galvanization, while the appellants argue that duty should be charged after the fabrication stage but before galvanization. The appellants base their argument on the contention that galvanization does not amount to manufacture, citing the judgment of the Hon'ble Supreme Court in Gujarat Steel Tubes Ltd. v. State of Kerala. The Supreme Court in that case ruled that galvanization does not result in the creation of new excisable goods with different characteristics.

The Department's representative argues that the Supreme Court's judgment is specific to sales tax and does not apply to Central Excise Law. He asserts that processes ancillary to the completion of a product, including galvanization, are considered part of the manufacturing process under the Central Excise Act. Therefore, according to the Department, goods fabricated by the appellants should be charged duty at the stage they are cleared from the factory, which includes the galvanization process.

After considering both parties' arguments, the Tribunal observes that while the appellants do not contest duty payment on goods at the fabrication stage, they dispute the duty being charged after galvanization. The Tribunal distinguishes previous judgments cited by both parties, emphasizing that in the present case, the goods are first fabricated and then galvanized before clearance from the factory. The Tribunal relies on the principle that duty must be paid based on the condition of the goods at the time of clearance, including processes that enrich the value of the goods. Citing the Metal Box case, the Tribunal affirms that duty is to be paid on goods as they emerge in the hands of the appellants for clearance from the factory, which includes goods fabricated and galvanized.

In conclusion, the Tribunal dismisses the appeal, ruling that duty on goods fabricated by the appellants and galvanized thereafter must be paid at the stage after galvanization.