1988 (4) TMI 272 - AT - Central Excise

Summary

Issues:
- Whether the process of galvanization of steel structural materials constitutes manufacture under the Central Excise Tariff.
- Whether the revision show cause notice issued by the Central Government was time-barred.

Analysis:

Issue 1: Process of Galvanization and Manufacture
The case involved a dispute regarding whether the process of galvanization of steel structural materials amounted to manufacture under the Central Excise Tariff. The Superintendent of Central Excise initially held that galvanization constituted manufacture, attracting duty under Item 68 of the Tariff. However, the Appellate Collector disagreed, stating that galvanization did not meet the definition of manufacture as per Section 2(f) of the Central Excises and Salt Act, 1944. The Central Government, after examining the case records, tentatively viewed galvanization as a manufacturing process due to the improved utility, character, and longer life of the final product. The issue centered on whether galvanization transformed the steel structural materials into a new product with distinct characteristics. The Tribunal ultimately agreed with the Appellate Collector, emphasizing that galvanization merely provided a protective coating of zinc to prevent rusting, thereby prolonging the life of the steel structural materials. The Tribunal distinguished this case from a Supreme Court judgment involving cotton fabrics, where processes led to the creation of a new product. In this instance, the steel structural materials remained the same before and after galvanization, leading to the conclusion that galvanization did not amount to manufacture under the Tariff.

Issue 2: Time-Barred Revision Show Cause Notice
The respondents argued that the revision show cause notice issued by the Central Government was time-barred, citing the six-month limit prescribed in the third proviso to Section 36 of the Act. The notice was issued on 2-3-1982 against an order-in-appeal dated 13-8-1981. On the other hand, the department contended that the notice was not time-barred as it pertained to a classification dispute, subject to a one-year time limit under the second proviso to Section 36. However, since the Tribunal's decision favored the respondents on the substantive issue of whether galvanization constituted manufacture, the question of the notice's timeliness became moot. Consequently, the Tribunal discharged the revision show cause notice and dismissed the appeal in favor of the respondents.

In conclusion, the Tribunal upheld the Appellate Collector's finding that the process of galvanization of steel structural materials did not amount to manufacture under the Central Excise Tariff. Additionally, due to this substantive agreement, the Tribunal did not delve into the issue of the timeliness of the revision show cause notice, ultimately ruling in favor of the respondents and dismissing the appeal.