1997 (12) TMI 469 - AT - Central Excise

Summary

Issues:
1. Interpretation of "manufacture" under Section 2(f) of the Central Excise Act, 1944.
2. Inclusion of raw material cost in the assessable value of the finished product.
3. Whether the processes undertaken by the appellant amount to manufacture.

Interpretation of "manufacture" under Section 2(f) of the Central Excise Act, 1944:
The appellant contended that the processes undertaken did not amount to manufacture as per Section 2(f) of the Central Excise Act, as the product did not acquire a distinct name, character, or use. Reference was made to various judicial decisions where the scope of "manufacturer" was discussed. The Department argued that the processes did result in a new commercially known product. Previous tribunal decisions were cited where similar contentions were rejected. The Tribunal analyzed the processes undertaken by the appellant, including receiving pipes, welding flanges, preparing rubber sheets, sandblasting, rubber lining, vulcanization, and painting. It was noted that the appellant had paid excise duty previously, indicating recognition of the product as excisable. The Tribunal concluded that the processes resulted in a new product different from the original pipes, suitable for specific functions like carrying corrosive chemicals, thus constituting manufacture under the Act.

Inclusion of raw material cost in the assessable value of the finished product:
The dispute arose when the Collector (Appeals) directed the inclusion of raw material cost supplied by customers in the assessable value, contrary to the Assistant Collector's decision. The appellant did not challenge this order before the Collector (Appeals). The Tribunal noted that the appellant had not provided evidence to support the claim that the processes did not amount to manufacture. The Tribunal emphasized the series of processes involved, the emergence of a new commercial product, and the absence of material supporting the appellant's case. It was concluded that the processes did result in a new product, justifying the inclusion of raw material cost in the assessable value.

Whether the processes undertaken by the appellant amount to manufacture:
The Tribunal highlighted the detailed processes undertaken by the appellant, emphasizing the transformation of the original pipes into a new product through various steps like rubber lining and painting. The appellant's argument that the processes did not constitute manufacture was dismissed based on the nature of the product, the absence of evidence supporting the claim, and the historical payment of excise duty. The Tribunal held that the processes undertaken resulted in a distinct commercially known product, different from the original pipes, thus constituting manufacture. The appellant's contention that the final product and raw material fell under the same Tariff Heading was deemed irrelevant in determining whether the processes amounted to manufacture.

In conclusion, the Tribunal found no grounds to interfere with the Collector (Appeals) decision and dismissed the appeal. The judgment reiterated that the processes undertaken by the appellant resulted in the creation of a new commercially known product, distinct from the original pipes, and therefore constituted manufacture under the Central Excise Act, 1944.