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TMI Blog2010 (8) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... s a manufacturing process. Therefore, there can be no levy of Central Excise duty on the tarpaulin made-ups. The process of stitching and fixing eyelets would not amount to manufacturing process, since tarpaulin after stitching and eyeleting continues to be only cotton fabrics. The purpose of fixing eyelets is not to change the fabrics. - Civil Appeal No. 5341 OF 2005, 6624-6626 OF 2002, 7563-7564 OF 2005 - - - Dated:- 4-8-2010 - JAIN D.K. AND DATTU H.T. JJ. R.P. Bhatt, Senior Advocate, (Arijit Prasad, Mrs. Asha G. Nair, B. Krishna Prasad, Mrs. Anil Katiyar, Jaimon Andrews, Achin Goel, Ms. Anjali chauhan, V.N. Raghupathy (NP), Ashok Kumar Singh (NP), Advocates with him) for the appearing parties. JUDGMENT H.L. DATTU, J: ISSUE: These appeals, which are at the instance of the Commissioner of Central Excise, raise a common issue, viz., whether the tarpaulin made-ups which are prepared after cutting and stitching the tarpaulin fabric and fixing the eye-lets would involve the process of manufacture and, hence, would fall within the definition of 'manufacture'. FACTS: 2) The issue above mentioned has come up in the light of the following facts which can be bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to the heading that provides a general description. CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL: 5) Aggrieved by the Commissioner's order dated 28.11.2000, the noticee/assessee filed appeal before the Tribunal. It was contended on behalf of the assessee that conversion of Tarpaulin fabric into "Tarpaulin made ups" does not amount to manufacture for the purpose of levy of central excise duty. However, Revenue contended that tarpaulin made-ups are a distinct marketable commodity known to Trade and therefore, it should be held to be excisable. It was also contended that, on account of the specific coverage of the item in the Central Excise Tariff, it would be exigible to duty. 6) The Tribunal after giving due consideration to the submission of both sides, has come to the conclusion that no 'manufacture' was involved in the conversion of Tarpaulin made-ups. While so deciding, the Tribunal has relied on the decision of Andhra Pradesh High Court in TRC No. 215/90 [ State of Andhra Pradesh v. Binny Ltd .], wherein it is held, that, stitching of the edges of cotton canvas and fitment of eyelets thereto did not bring about any material change in the essential charact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... needs to be satisfied for levy of Excise Duty. The power to levy the excise duty is provided under Chapter II titled 'Levy and Collection of Duty' of the Central Excise Tariff Act, 1985 (hereinafter referred to as 'the Act'). The excise duty is levied under Section 3 of the Act. The basis for the levy of Central Excise duty is on the production or manufacture of goods within the country. 11) Section 2(d) of the Act defines the meaning of the expression 'excisable goods' means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt. 12) At the relevant time the expression "Manufacture" was defined in Section 2(f) of the Act, as under:- 'Manufacture' includes any process - i. incidental or ancillary to the completion of a manufactured product; and ii. which is specified in relation to any goods in the Schedule or Chapter Notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture. 13) The result of the definition contained in Section 2(f) of the Act is that the word manufacture means production of an article for use from raw or prepared material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se." 16) Line of cases has settled the law as regards the definition of 'manufacture'. Keeping in view the detailed observations made in the case of Union of India v. Delhi Cloth and General Mills, [1977 (1) ELT (J199)] , this court in the case of Bhor Industries Ltd., Bombay v. Collector of Central Excise, Bombay, [1989 (40) ELT 280(SC)] , has stated that "it is necessary, to find out whether there are goods, that is to say, articles as known in the market as separate distinct identifiable commodities...... Marketability, therefore, is an essential ingredient in order to be dutiable under the Schedule to Central Tariff Act, 1985." 17) In Collector of Central Excise Vs. Kulay Flush Door and Furniture Co. (P) Ltd., [(1988) Supp. SCC 239] , it is stated, that, manufacture implies a change, but every change is not a manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more was necessary and there must be transformation, a new and different article must emerge having a distinct name, character or use. 18) In B.P.L. India Ltd. v. Commissioner of Central Excise, Cochin , [2002 (143) ELT 3(SC)] , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the Schedule, it would not be dutiable under the Excise Law, if the said article is not 'Goods' known to the market. Marketability, therefore, is an essential ingredient in order to be dutiable under Schedule to Central Excise Tariff Act, 1985. [ See Bhor Industries v. CCE, [1989 (4) ELT 280 ], Moti Laminates Pvt. Ltd. v. CCE, [1995 (76) ELT 241] , Dharangadhara Chemicals Works Ltd. v. Union of India , [1997 (91) ELT 253] . 23) Is there any manufacture when Tarpaulin sheets are stitched and eyelets are made? In our view, it does not change basic characteristic of the raw material and end product. The process does not bring into existence a new and distinct product with total transformation in the original commodity. The original material used i.e., the tarpaulin, is still called tarpaulin made-ups even after undergoing the said process. Hence, it cannot be said that the process is a manufacturing process. Therefore, there can be no levy of Central Excise duty on the tarpaulin made-ups. The process of stitching and fixing eyelets would not amount to manufacturing process, since tarpaulin after stitching and eyeleting continues to be only cotton fabri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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