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TMI Blog1986 (12) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Licence and manufacture excisable goods falling under Tariff Item 68 of the First Schedule to the Central Excises and Salt Act 1944. The appellant manufactured and cleared different types of identifiable machine parts/goods against specific orders made out of steel castings. In order to manufacture these items, steel castings of required shapes and sizes were cast. Thereafter these castings were machined/ polished so as to make the finished products as identifiable goods/machine parts having distinct trade names, characters and uses. The Revenue authorities were of the view that these products were classifiable under item 68 of the Central Excise Tariff as these were not covered under any items 1 to 67 of the Central Excise Tariff. The Superintendent of Central Excise, Range 3, Calcutta V-Divn had issued a show cause notice as to why the duty of excise amounting to Rs. 26,150.98 should not be paid by them as required under Rule 10 read with Rule 173 J of the Central Excise Rules 1944. In reply to the said show cause notice the appellant had contended that they had some doubts about paying of excise duty on machined steel castings under T.I.68 as the same were covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s etc. by casting operation and these things without any change in the shape or name are delivered to the customers after giving it a finishing in the finishing shop and as such these identical goods with identical names and sizes had already been assessed to central excise duties under Tariff Item 26AA(V) and no excise duty is leviable under Tariff Item 68 of the Central Excise Tariff. He has pleaded that after the process of casting the same product is put to machining, polishing and spray painting etc. and excise duty cannot be levied twice. In support of his arguments he has referred to a judgment of the Hon'ble Supreme Court in the case of Union of India v. Delhi Cloth and General Mills and others: Civil Appeal Nos. 168-170 of 1980, Order dated 12-10-1962 reported in Excise and Customs Reporter Compilation C-1-216/AIR 1963 Supreme Court 791 where the Hon'ble Supreme Court had held that processing cannot be equated with manufacture. The word "manufacture" used as a verb is generally understood to mean as "bringing into existence a new substance" and does not mean merely "to produce some change in a substance", however minor in consequence the change may be. "Manufacture" implie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Item 68 when such castings are converted into different shapes/sizes of different character through further process of machining, and used as machine parts or other components and even on those iron castings- if no machining was done they were only crude castings of iron, and the product was not liable to duty under Tariff Item 68 as the same was covered under Tariff Item 25 of the Central Excise Tariff. His alternative argument is that there cannot be any double taxation. In support of his argument he has referred to a judgment of the Hon'ble Supreme Court in the case of Union of India & Others v. Tata Iron and Steel Company Limited reported in 1976 SC 599 where the Hon'ble Supreme Court had held that there cannot be double taxation on the same article. In the said case there was dispute as to the applicability of exemption notification No. 30/60 dated 1-3-1960 granting exemption to duty paid pig iron. The Hon'ble Supreme Court confirmed the findings of the High Court that the notification does not show that exemption is granted only when duty paid pig iron is used and that the exemption would not be available if the duty paid pig iron is mixed with other non-duty paid mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that one cannot absolutely make a thing by hand in the sense that nobody can create matter by hand, it is the transformation of a matter into something else, and that something else is question of degree, whether that something else is a different commercial commodity having its distinct character use and name and commercially known as such. In other words, if by application of labour and skill an object is transformed to the extent that it is commercially known differently, it will suffice to say that manufacture has taken place for the purpose of Central Excise. The degrees of transformation and labour and skill spent are irrelevant. Therefore, the question of whether a particular process is a process of manufacture or not, has to be determined naturally having regard to the facts and circumstances of each case and having regard to the well known test laid down by the Supreme Court in various decisions. He has also referred to another judgment of the Delhi High Court in the case of Metal Forgings Pvt. Ltd. & Another v. Union of India and Others reported in 1985(20) E.L.T. 280 where the Hon'ble High Court had held that by the process of, forging, a forged product of iron and steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal. 5. Shri Shankar Ghose, the learned Sr. Advocate, has again referred to the Hon'ble Supreme Court judgment in the case of Union of India v. Delhi Cloth Mills reported in AIR 1963 SC 791. He has argued that there is no transformation and there is no evidence that on record to the effect that there had been transformation. He has pleaded that the judgments cited by the learned Departmental Representative are not relevant. He has pleaded for the acceptance of the appeal. 6. We have heard both the sides and have gone through the facts and circumstances of the case. The appellant had manufactured steel castings of required shapes and sizes and the castings so manufactured are liable to Central Excise Duty under Tariff Item 26AA(V). Relevant extract from the then Tariff Item 26AA is reproduced below :- "26AA Iron or Steel Products, the following namely :- xxxxxxxxxxxxxxx (v) All other steel castings, not otherwise specified". 7. In the matter before us there is no dispute as to the levy of Central Excise Duty on steel castings. The appellant disputes that these steel castings are machined and polished and are sold to Railways. After machining/polishing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a process of manufacture or not, has to be determined naturally having regard to the facts and circumstances of each case and having regard to the well known test laid down by the Supreme Court in various decisions. Para Nos. 25, 30, 31 and 37 from the said judgment are reproduced below :- "25. It may be noted that in the case of Hiralal Jitmal v. Commissioner of Sales Tax (1957) S.T.C. Vol. VIII 325 a Division Bench of Madhya Pradesh High Court in considering the meaning of the expression 'manufacture' for the purpose of the Madhya Bharat Sales Tax Act, 1950, was of the view that it was not necessary that there must be a transformation in the materials and that the transformation must have progressed so far that the manufactured article became commercially known as different article from the raw materials and all that was required was that the material should have been changed or modified by man's art or industry so as to make it capable of being sold in an acceptable form to satisfy some want, or desire, or fancy or taste of man. It is apparent that the concept of 'manufacture' in that decision has been given a wide meaning. It is not necessary to go into this aspect any furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity." It may be noted that the taxable event in the context of Sales Tax Law is 'sale'. The taxable event under the Excise Law is 'manufacture'. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes 'manufacture' takes place and liability to duty is attracted. Though in the facts of that case perhaps it was not necessary and as such the attention of the Court was not drawn to the definition of the term 'manufacture' under Section 2(f) of the Central Excise Act nor was the Tariff Item IB placed before the Court. 31. This decision was referred to and followed in the case of Chowgule & Co. Pvt. Ltd. and Another v. Union of India and Others -(1981) 1 SCC 653. Whatever may be the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have thought it most certainly was, although the name "wool" is applied to it both before the process begins and after it has ended." "The learned judge further observed that in that case saccharin was 'manufactured' and manufacture of saccharin does cover a process that was done in that case." A simple perusal of the above paras reflects that the facts of the present case clearly lead us to the inference that steel castings after machining and polishing become a new distinct identifiable commodity and the duty is correctly leviable on them under Tariff Item 68 of the Central Excise Tariff. The Tribunal in the case of Mahindra Engineering and Chemical Products Ltd., Pimpri, Pune v. Collector of Central Excise, Pune reported in 1984 (18) E.L.T. 680 (Tribunal) = 1984 (4) ETR 249 had made similar observations. The learned Senior Advocate's argument that there cannot be double taxation does not fit in the facts and circumstances of the present matter before us. For the levy of Central Excise Duty, there has to be manufacture in terms of the provisions of Section 2(f) of the Central Excises and Salt Act, 1944. If the same product is put to different processes and in those processes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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