2013 (9) TMI 21 - AT - Central Excise

Manufacture - marble slabs and marble tiles - cutting of marble blocks into marble slabs - Held that - activity of polishing and ultimate conversion of blocks into polished tiles amounts to manufacture - those marble tiles were seized as the same were not accounted for in the statutory record maintained by the appellant as such those were liable to be confiscated in view of Rule 25(1)(b) of the Central Excise Rules. As regards cutting of marble blocks into marble slabs, since the activity is not amounting to manufacture, the order of confiscation is not valid.

Summary

Issues Involved:
1. Whether the process of cutting marble blocks into slabs and tiles amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944.
2. Whether the seized marble slabs and tiles are excisable goods liable to confiscation under Rule 25 of the Central Excise Rules, 2001.

Issue-wise Detailed Analysis:

1. Whether the process of cutting marble blocks into slabs and tiles amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944:

The core issue revolves around whether the transformation of marble blocks into slabs and tiles constitutes "manufacture" as per Section 2(f) of the Central Excise Act, 1944. The Commissioner (Appeals) had relied on the Supreme Court's judgment in M/s. Aman Marble and Industries v. C.C.E., Jaipur, which held that cutting marble blocks into slabs does not amount to manufacture. The department, however, argued that the process of converting marble blocks into marketable slabs and tiles is covered under the definition of "manufacture" and cited the Supreme Court's judgment in Income Tax Officer, Udaipur v. Arihant Tiles & Marbles (P) Ltd., which held that converting marble blocks into tiles of specific sizes amounts to manufacture.

2. Whether the seized marble slabs and tiles are excisable goods liable to confiscation under Rule 25 of the Central Excise Rules, 2001:

Rule 25 of the Central Excise Rules, 2001, stipulates that only excisable goods are liable to confiscation. The term "manufacture" includes processes incidental or ancillary to the completion of a manufactured product. The Tribunal examined whether the marble slabs and tiles came into existence as a result of manufacture. The Supreme Court in the matter of Union of India v. DCM emphasized that "manufacture" implies the creation of a new substance, not just a minor change in a substance. The Tribunal also referenced the case of Union of India v. Parle Products Pvt. Ltd., which held that a process amounts to manufacture if it results in a new and commercially distinct article.

The Tribunal noted that in Aman Marble Industries, the Supreme Court had held that cutting marble blocks into slabs does not amount to manufacture as no new and distinct commercial product comes into existence. However, in Arihant Tiles, the Supreme Court recognized that the process of converting marble blocks into polished slabs and tiles involves multiple stages and constitutes manufacture.

Judgment:

The Tribunal concluded that the marble tiles, both polished and unpolished, seized from the respondent's premises were excisable goods as they were produced through a process amounting to manufacture. Therefore, the Commissioner (Appeals) was incorrect in setting aside the confiscation and redemption order for the marble tiles. The Tribunal restored the order-in-original regarding the confiscation of marble tiles but reduced the redemption fine to Rs. 40,000/- and the penalty to Rs. 20,000/-.

However, the marble slabs, which were also seized, did not undergo a process amounting to manufacture as per the Supreme Court's decision in Aman Marble Industries. Consequently, the marble slabs were not excisable goods and were not liable to confiscation under Rule 25.

Conclusion:

The appeal was partly accepted. The Tribunal maintained the impugned order concerning the marble slabs but set aside the Commissioner (Appeals) order regarding the marble tiles, restoring the order-in-original for their confiscation. The redemption fine and penalty were modified in light of the overall circumstances. The appeal was disposed of accordingly.