1997 (11) TMI 236 - AT - Central Excise

Issues Involved:
1. Does roughening of aluminium sheets on one side amount to manufacture?

Detailed Analysis:

Issue 1: Does roughening of aluminium sheets on one side amount to manufacture?

Background:
The Revenue appeals were directed against the Order-in-Appeal dated 25th Nov., 1988, of the Collector of Central Excise (Appeals), Bombay. The central question was whether the process of roughening aluminium sheets on one side constitutes "manufacture" under the Central Excise Act, 1944.

Collector (Appeals) Decision:
The Collector (Appeals) allowed the Revenue appeal, concluding that the roughened aluminium sheets, used in the manufacture of lithographic plates, acquire a distinct character and use different from plain aluminium sheets. He stated, "these sheets are used in the manufacture of lithographic plates... It is known as Lithographic plates in the trade."

Appellants' Argument:
The appellants contended that they are not manufacturing lithographic plates but merely roughening one side of aluminium sheets. They argued that this process does not change the essential character of the aluminium sheets, and cited a previous order by the Assistant Collector dated 30-12-1985, which detailed the processes subsequent to roughening and concluded that roughened aluminium sheets do not become lithographic plates. They also referenced Tribunal's Order No. 325/87-B-I, which held that intensive polishing of zinc sheets/plates does not amount to manufacture.

Department's Argument:
The department reiterated that aluminium sheets roughened on one side assume a character different from plain aluminium sheets, implying a transformation significant enough to be considered manufacture.

Tribunal's Observations:
The Tribunal examined the Collector (Appeals)'s observations, noting an inconsistency. On one hand, the Collector admitted that roughened aluminium sheets are used in making lithographic plates, yet on the other, he claimed they acquire a distinct character upon roughening. The Tribunal pointed out that at the stage when these goods leave the manufacturer's premises, they are not lithographic plates but are used to make lithographic plates subsequently.

Assistant Collector's Order:
The Assistant Collector's order dated 30th December, 1985, was pivotal. It described in detail the processes and expert opinions, concluding that roughening one side of aluminium sheets does not transform them into lithographic plates. The Chemical Examiner's report and opinions from various experts consistently indicated that roughened aluminium sheets remain distinct from lithographic plates and require further processing to become usable as lithographic plates.

Expert Opinions:
Several experts, including Shri R. Subbu, Shri S.B. Jadhav, and Professor Dr. S.P. Potnis, provided detailed opinions reinforcing that roughened aluminium sheets cannot be directly used as lithographic plates without additional processes like coating with photosensitive materials, exposure to light, and chemical treatments.

Market Enquiries:
Discreet enquiries with printers and the printing industry confirmed that roughened aluminium sheets are not marketable as lithographic plates without further processing. Units like M/s. Shantadurga Printers and M/s. Western Printers & Publishers outlined the necessary steps to convert roughened sheets into lithographic plates.

Legal Precedent:
The Tribunal referenced the definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944, which implies a transformation resulting in a new and distinct article. The Tribunal found that mere roughening of aluminium sheets does not meet this criterion.

Conclusion:
The Tribunal concluded that the roughening of aluminium sheets on one side does not amount to manufacture. The order of the Collector (Appeals) was set aside, and the appeals were allowed based on the detailed reasoning and evidence provided by the Assistant Collector, expert opinions, and market enquiries.

← Previous Next →