1984 (11) TMI 339 - Commissioner - Central Excise

Issues Involved:
1. Whether the process of cutting, drilling, and welding of steel materials by the respondents constitutes "manufacture" under the Central Excises and Salt Act, 1944.
2. Classification of fabricated steel structures under Tariff Item 68 (T.I. 68) of the Central Excise Tariff.
3. The applicability of prior judicial decisions and Board's orders to the current case.

Issue-wise Detailed Analysis:

1. Whether the process of cutting, drilling, and welding of steel materials by the respondents constitutes "manufacture" under the Central Excises and Salt Act, 1944:

The Deputy Collector of Central Excise, Visakhapatnam, initially held that the processes undertaken by the respondents (cutting, drilling, and welding of steel materials) did not result in the manufacture of new goods. He relied on the Supreme Court's judgment in the case of Delhi Cloth and General Mills Company Limited and other relevant decisions, concluding that no new commodity with a distinct name, character, or use emerged from these processes. The Collector of Central Excise, Guntur, however, contested this view, arguing that the processes brought into existence identifiable parts of a structure, thus constituting manufacture. He cited the decision of the CEGAT Special Bench in M/s. Structurals and Machineries v. Collector of Central Excise, Patna, which supported his stance. The respondents countered that their activities did not involve complicated or intricate processes and that the items were not sold as goods in the market but were specific to the construction project.

2. Classification of fabricated steel structures under Tariff Item 68 (T.I. 68) of the Central Excise Tariff:

The Deputy Collector concluded that the fabricated items did not fall under T.I. 68 as they did not lose their identity as plates, channels, angles, and beams after the processes of cutting, drilling, and welding. The Collector disagreed, asserting that the fabricated items like beams, trusses, and bracings were known to the public and should be treated as goods under T.I. 68. The respondents argued that the fabricated items were not goods in themselves but components of a larger structure, which ceased to be movable after erection. They emphasized that the items were not brought to the market for sale but were tailor-made for the specific project.

3. The applicability of prior judicial decisions and Board's orders to the current case:

The respondents relied on several judicial decisions and Board's orders, including the Supreme Court's judgment in the case of Delhi Cloth and General Mills Company Limited, the decision of the Government of India in M/s. Otis Elevators Company (I) Limited, and the CBEC's decision in M/s. Hindustan Steel Works Construction Limited. They argued that these precedents supported their claim that the processes did not constitute manufacture. The Collector, however, referenced the decision of the CEGAT Special Bench in M/s. Structurals and Machineries v. Collector of Central Excise, Patna, which he believed was more relevant to the case at hand. The respondents contended that this decision was not applicable as it pertained to more intricate and involved processes, unlike their simpler activities.

Conclusion:

The authority concluded that the processes of cutting, drilling, and welding performed by the respondents did not amount to manufacture. It was determined that the raw materials retained their original identity and no new commodity with a distinct name, character, or use emerged. The decision of the Deputy Collector to drop the proceedings against the respondents was upheld, rejecting the application by the Collector of Central Excise, Guntur. The authority emphasized that each case must be examined individually, and the determination of manufacture should be based on the specific facts and the general principles laid down by the Supreme Court in the cases of DCM and South Bihar Sugar Mills.

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