1997 (5) TMI 111 - AT - Central Excise

Summary

Issues:
Appellant aggrieved by order reversing demands under show cause notices; Whether affixing rubber lining on steel pipes amounts to "manufacture" under Central Excise Act, 1944; Interpretation of Notification No. 120/75 for duty exemption; Applicability of earlier decisions on similar processes; Entitlement to duty exemption under Notification No. 120/75.

Analysis:
The appellant, engaged in manufacturing rubber products and undertaking job work for rubber lining of steel pipes, contested demands proposed under show cause notices for not including the value of steel pipes in the assessable value. The Assistant Collector initially dropped the demands, but the Collector (Appeals) reversed these orders, leading to the current challenge. The main contention was whether affixing rubber lining on steel pipes constitutes "manufacture" under the Central Excise Act, 1944.

The appellant argued that no duty should be levied on the steel pipes received from customers, relying on the interpretation of "manufacture" and the benefit of exemption under Notification No. 120/75. The Collector (Appeals) upheld the demands, emphasizing the creation of a new commercially known product through the processes undertaken by the appellant. The Tribunal found that the appellant had paid duty only on the rubber lining and job charges, not on the value of iron pipes, as permitted under Notification No. 120/75 until its expiry on 1-3-1986.

The Tribunal distinguished earlier decisions on similar processes, noting the unique nature of the appellant's activities involving various protective processes on steel pipes. While some decisions cited by the appellant were considered, the Tribunal concluded that the appellant failed to demonstrate that the processes undertaken did not result in a new commercially known product. Therefore, the Tribunal partially set aside the Collector (Appeals) order, confirming duty demands for one of the show cause notices but rejecting the demands under the others.

In summary, the Tribunal held that the demands under most show cause notices were unsustainable, except for one notice post-1-3-1986. The appellant was entitled to duty exemption under Notification No. 120/75 until its expiry and was not required to pay duty on the assessable value beyond the rubber lining and job charges. The appeals were disposed of accordingly.