1972 (2) TMI 89 - HC - Central Excise

Summary

Issues Involved:

1. Whether aluminium cans or torch bodies are "goods" within the meaning of the Central Excises and Salt Act, 1944.
2. Whether the process of making aluminium cans involves "manufacture" as defined by the Act.
3. Applicability of Entry 27(e) to aluminium cans produced by the impact extrusion process.
4. Whether excise duty is payable ad valorem on aluminium cans under Entry 27(e).

Issue-wise Detailed Analysis:

1. Whether aluminium cans or torch bodies are "goods" within the meaning of the Central Excises and Salt Act, 1944:

The court examined whether aluminium cans are "goods" as per the Act. The learned single judge initially held that the aluminium cans were not marketable and thus not "goods" under the Act. However, the appellate court disagreed, emphasizing that the term "goods" in the Act should be understood as defined in the Government of India Act, 1935 and the Constitution of India, which includes all materials, commodities, and articles. The court concluded that aluminium cans are indeed "goods" as they are known and used within the torch manufacturing trade, even if they are not sold in a general market. The court stated, "A thing would, nonetheless, be 'goods' even if it does not have a general market, where it can be easily bought or sold."

2. Whether the process of making aluminium cans involves "manufacture" as defined by the Act:

The court agreed with the learned single judge that the production of torch bodies from aluminium slugs constitutes "manufacture." Referring to the Supreme Court's decision in the Delhi Cloth Mill's case, the court noted that "manufacture" signifies the bringing into existence of a new substance. The court observed that aluminium slugs are transformed into hollow long tabular cans, which are entirely distinct from the slugs, thus constituting a new substance. The court stated, "We are in agreement with the learned Single Judge that the process involved in the making of the cans is 'manufacture'."

3. Applicability of Entry 27(e) to aluminium cans produced by the impact extrusion process:

The court examined whether aluminium cans produced by the impact extrusion process fall under Entry 27(e) of the Central Excises and Salt Act, 1944. The companies argued that the impact extrusion process is different from the extrusion process mentioned in Entry 27(e). However, the court found that the process described in the petitions involves pushing aluminium slugs through a die, which fits the definition of "extrusion" as per the Aluminium Association of India's Manual of Nomenclature for Aluminium Mill Products. The court stated, "The process of producing aluminium case or torch bodies, as described in the writ petitions, is basically pushing aluminium through a die, and is squarely within the definition of the term 'extrusion' given in the Manual."

4. Whether excise duty is payable ad valorem on aluminium cans under Entry 27(e):

The court did not delve into the question of valuation for determining the duty, as it was not addressed by the learned single judge. However, it noted that both sub-entries (d) and (e) under Entry 27 impose a duty of 25% ad valorem. The court also mentioned that if the impact extrusion process is considered different from extrusion, the aluminium cans would still fall under sub-entry (d) as "pipes and tubes," attracting the same duty rate. The court concluded, "Under both entries (d) and (e), the rate of duty is 25% ad valorem."

Conclusion:

The court allowed Special Appeal No. 307 of 1971 filed by the Union of India and dismissed the writ petition filed by Union Carbide India Ltd., holding that aluminium cans are goods subject to excise duty. The court also dismissed Writ Petition No. 3649 of 1971 as infructuous. Special Appeal No. 429 of 1969 filed by Messrs Geep Flashlight Industries was technically allowed, and the writ petition was dismissed with costs in both courts.