1997 (5) TMI 177 - AT - Central Excise

Issues Involved:
1. Classification of aluminium sheets under the Central Excise Tariff Act.
2. Determination of whether the respondent's activities constitute "manufacture" under Section 2(f) of the Central Excise Act.
3. Eligibility for exemption under Notification 187/84.
4. Applicability of previous Tribunal decisions and Supreme Court rulings.
5. Marketability and commercial identity of the final products.

Detailed Analysis:

1. Classification of Aluminium Sheets:
The Assistant Commissioner had initially classified the respondent's products-aluminium sheets-under sub-heading 7613.90 of the Central Excise Tariff Act (CETA), stating that these products could not be considered angles, shapes, and sections under sub-heading 7603.10. This classification was based on the finding that the products were structurals used for false ceilings and partitions, not manufactured by extrusion, rolling, drawing, or forging but by bending and pressing.

2. Determination of Manufacture:
The respondent argued that their activities, which involved cutting, punching, bending, and painting aluminium sheets, did not constitute "manufacture" as per Section 2(f) of the Central Excise Act. They contended that no new product with a distinctive name, character, or use emerged from these processes. The Assistant Commissioner, however, determined that these processes resulted in products with a new commercial identity, thereby constituting manufacture. The Tribunal upheld this view, distinguishing it from cases like Ajit India (1985) and Aruna Industries (1986), where similar activities were not considered manufacture due to the absence of processes like shearing.

3. Eligibility for Exemption:
The respondent claimed exemption under Notification 187/84, which was contingent on the products being classified under specific sub-headings. The Assistant Commissioner found that the products did not meet the criteria for exemption under sub-heading 7603.10 but fell under 7613.90. The Tribunal agreed, stating that the respondent failed to prove that the shapes and sections were manufactured from goods classifiable under 7605.10 or 7605.90, as required by the exemption notification.

4. Applicability of Previous Tribunal Decisions and Supreme Court Rulings:
The Tribunal examined various precedents, including Structurals and Machineries (1984), Ajit India (1985), and Mittal Engineering Works (1996). The Tribunal found that the processes involved in the respondent's case were more intricate and commercially significant than those in Ajit India, thereby constituting manufacture. The Tribunal also distinguished the case from Mittal Engineering, where the products were not marketable until fully assembled and attached to the earth, unlike the respondent's products, which were sold and used in contracts.

5. Marketability and Commercial Identity:
The Tribunal emphasized that the respondent's products, after undergoing processes like cutting, punching, and drilling, acquired a new commercial identity and were marketable. This was evidenced by the respondent's own admission that they sold some of the fabricated items. The Tribunal concluded that the processed sheets were distinct from the raw materials, thereby affirming the Assistant Commissioner's classification and rejecting the claim for exemption.

Conclusion:
The Tribunal set aside the order of the Commissioner of Central Excise & Customs (Appeals) and restored the Order-in-Original passed by the Assistant Commissioner. The appeal was allowed, affirming that the respondent's activities constituted manufacture and that the products were correctly classified under sub-heading 7613.90, making them ineligible for the claimed exemption.

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