1986 (6) TMI 221 - AT - Central Excise

Summary

Issues involved: Determination of whether the activities conducted by M/s. R.S. Steel Works amount to manufacturing new goods and the imposition of duty on transmission towers and their components.

Summary:
1. The appeal by M/s. R.S. Steel Works challenged the order of the Appellate Collector of Central Excise, New Delhi, which deemed the activities of the appellant as manufacturing new goods based on a contract for tower fabrication.

2. The appellants argued that the reference to the unsigned contract was erroneous, maintaining that they processed MS angles for the Electricity Board's tower construction, with the actual tower erection done by other firms, not by them.

3. The counsel for M/s. R.S. Steel Works contended that the processed sections were merely component parts of the tower, citing a Tribunal order in a similar case.

4. In contrast, the department's counsel cited precedents where processing activities resulted in manufacturing, likening the situation to the production of brake shoes and excisable sugar crystallizers.

5. The appellants emphasized that the processed MS angles retained their identity and utility, referencing a relevant case law.

6. The Tribunal analyzed the nature of the processed MS angles and sections, concluding that they did not transform into new products like the sugar crystallizer, as they maintained their original form and utility as steel angles even in the tower assembly.

7. It was highlighted that the strength and purpose of the processed angles lie in their steel composition, emphasizing that the transmission towers were assembled from various components, including bolts and nuts from other sources.

8. Ultimately, the Tribunal set aside the Appellate Collector's order, ruling that M/s. R.S. Steel Works was not liable to pay duty on the transmission towers or their components as they had already paid duty as MS angles when leaving the factory.