1986 (1) TMI 259 - AT - Central Excise

Summary

Issues Involved:
1. Whether the processes performed on iron and steel materials supplied by the Gujarat Electricity Board amount to "manufacture" u/s 2(f) of the Central Excise Act.
2. Whether the products resulting from these processes are liable to Central Excise Duty under Item 68 of the Central Excise Tariff.

Summary:

Issue 1: Definition of Manufacture u/s 2(f)
The respondents, manufacturers of structural sheets for electric towers, argued that their activities did not constitute "manufacture" as defined u/s 2(f) of the Central Excise Act. They claimed that the processes of straightening, cutting, bending, punching, and galvanizing steel angles, plates, channels, and round bars did not result in new products but retained the original identity of the materials. The Assistant Collector initially held that these processes amounted to manufacture, classifying the products under Item 68. However, the Appellate Collector, referencing cases like D.C.M., South Bihar, and Vulcan Laval, concluded that these processes did not amount to manufacture as no new product with a distinct name, character, or use emerged.

Issue 2: Liability to Central Excise Duty under Item 68
The Revenue contended that the processes resulted in different articles with distinct names and uses, thus attracting duty under Item 68. They argued that the processed materials were components of transmission towers and should be classified as such. The respondents countered that the materials remained iron and steel articles under Item 26AA, even after processing. The Tribunal examined whether the processed materials constituted new excisable goods. It was determined that the materials did not undergo a transformation into a different commodity; they remained structural shapes like angles, channels, and beams. The Tribunal referenced IS:802 Part 2 1978, which indicated that these materials were known as angle sections at the time of dispatch and prior to fabrication at the site.

Conclusion:
The Tribunal concluded that the processes performed by the respondents did not result in the manufacture of new excisable goods. The materials continued to fall under Item 26AA, and there was no justification for classifying them under Item 68. The appeal by the Revenue was dismissed, affirming the Appellate Collector's decision that the activities did not amount to manufacture and the products were not liable to duty under Item 68.