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Issues Involved:
1. Whether excise duty is liable to be imposed on "resin" or "oleo pine resin". 2. Whether the process of collecting resin constitutes "manufacture" or "production" under the Central Excise Act. Summary: Issue 1: Excise Duty on Resin 10. The only question for determination by this Court is whether excise duty is liable to be imposed on "resin" or "oleo pine resin" (these are two different nomenclatures referring to the same product, and therefore wherever "Resin" word is used it would be deemed to be a reference to oleo pine resin as well). 11. According to the petitioners no excise duty is liable to be levied on resin as there is no "manufacture" or "production" involved in resin and therefore it is not an excisable item. Learned Senior Counsel relied upon Item No. 84 of list I to the 7th Schedule of the Constitution of India which reads as under :- 12. What has been stressed by the learned Senior Counsel is the phrase "goods manufactured or produced in India" and it is submitted that excise duty can only be levied on the goods which are either manufactured or produced in India. The senior counsel has further taken this Court to Section 3 (1) (a) of the Central Excise Act. Section 3 (1) (a) of the Central Excise Act reads as under :- 13. Much stress has been raised on the phrase "goods manufactured or produced in India" and again the argument raised that excise duty is only leviable on something which is either manufactured or produced in India. It is submitted that resin is something which is neither manufactured or produced, it is only "collected" from a tree, and does not involve a process of either production or manufacture. Resin is a product in its pure original form, and hence not liable to be levied excise duty. 14. Learned counsel appearing for the Revenue Sri Shobhit Saharia on the other hand would argue that definitely resin is not something which involves a "manufacturing process" as what is "manufacture" is by now settled, he nevertheless submits that resin is "produced" and therefore an excise duty is liable to be given on it. He would argue that the definition of "produce" or "production" is much wider and would include the "process" of taking out "resin" from the tree. Much therefore depends upon the meaning of "manufacture" or "produce" and how these words have been defined under Excise and other fiscal laws by the Apex Court and other High Courts. Issue 2: Definition of Manufacture or Production16. Under the Central Excise Act, the words "manufacture" and "produce" have been used in juxtaposition to each other. The learned Senior Counsel for the petitioner Sri Ajit Kumar Sinha submitted that irrespective of whether we call a process "manufacture" or "production", for a product undergoing this process must come out as a "new product" before an excise duty can be levied on it. There is one case which is relied upon by both the petitioner as well as the respondents i.e. Commissioner of Income Tax, Orissa and Ors. Vs. N.C. Budharaja and Company and Ors. AIR 1993 SC 2529. Though the issue before the Apex Court in the said case was different and it pertains to elaboration of phrase "manufactured or produced articles" which occurs in Section 80-HH and Section 84 of the Income Tax Act and what had to be seen was whether a construction of a dam amounts to either manufacture or production. The Apex Court held that it did not. But while doing so, it elaborated the two words, viz. "manufacture" and "production". What was said by the Apex Court was that the word "production" has a wider connotation than the word "manufacture" and while every manufacture can be categorized as production every production need not amount to manufacture. But what was common in both the cases (of either manufacture or production) is that either after manufacture or production what should come out is an entirely new product. 17. A number of case laws were cited by the counsel for the petitioners in order to prove his argument that resin is neither "produced" nor "manufactured". Most of the rulings cited by the counsel though relate to "Manufacture" and "Produce". One of the rulings is Commissioner of Income Tax, Orissa and Ors. Vs. N.C. Budharaja and Company and Ors. AIR
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