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TMI Blog1992 (6) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... o Magnetic Tapes into Pancakes from jumbo rolls is exempted from the Central excise control. Therefore, no licence is required. The Assistant Collector rejected their request on the ground that the process of slitting of jumbo rolls into pancakes amounts to manufacture and therefore, no certificate as prayed for can be issued. On appeal, the Collector confirmed the order of the Assistant Collector. Hence the appeal before us. 3. The relevant tariff heading reads as follows :- Tariff Heading 8523.13: Video Tapes in the form of jumbo rolls, pancakes, hubs or reels, before amendment the Tariff Heading 85.23 read as Prepared unrecorded media for sound recording or similar recording of other phenomena, other than products of Chapter 37". A reading of the tariff entry shows video tapes in any form whether it is in the form of jumbo rolls or pancakes or mini-pancakes, falls under Tariff Entry 8523.13. The Assistant Collector held that from a reading of the tariff entry, it can be considered that there is specific entry for each of the products Such as jumbo rolls, pancakes, mini-pancakes in the new tariff though all the items are falling under the same Chapter sub-heading No. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce there is change in use and name pancakes are distinct and separate product and therefore, they are liable to duty and the process of slitting amounts to manufacture. According to him, the rate of duty is not relevant criteria. In other words, merely because there is the same rate of duty in respect of jumbo rolls, as well as pancakes it cannot be said that there is no manufacture. Similarly, he submitted that same sub-heading or different sub-headings is not relevant criteria for determining whether the process amounts to manufacture or not. Jumbo rolls and pancakes are differently known in the market. They are distinct and separate products. Further the tariff entry separately identifies the products. Therefore, the process of slitting amounts to manufacture. He further pointed put that the judgment of the Madras High Court does not relate to the present tariff entry but relates to a tariff entry prior to the amendment in 1988. He, therefore, prays that the order of the Collector and the Assistant Collector should be confirmed. 6. Shri Jain appearing for the appellants while reiterating the arguments, submitted, relying on the order of this Tribunal in Basheer Ahmed v. C.C.E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g process would attract the levy of duty under Tariff Entry 37.02. If another person manufactures photographic flats and films then that manufacturing process would attract Tariff Entry 37.01. But if photographic flats or films are not manufactured at all but only made out of jumbo rolls by cutting into smaller pieces, then thereafter no manufacturing process involved Tariff Entry 37.01 cannot be made use of to hold that there is a manufacturing process. The above observations squarely apply to the facts on hand. We may also refer to the order of this Tribunal in Hindustan Photo Films (supra) wherein it was held that, the nature of the subject jumbo rolls namely, cinematograph films is not to be doubted though it is true that they cannot be straightaway put into cinematograph equipment without undergoing the process of slitting and perforation. These latter physical processes actually serve to help the mechanical process of fitment into the equipment and movement of the film in the equipment. But the quality of the goods which makes it cinematograph colour positive film is essentially attributable to the process of emulsion coating etc... It was also pointed out that, till not so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough known as different commercial commodities they being specifically enumerated and mentioned in the definition of iron and steel, they cannot become different goods. The High Court accepted the said contention and held that conversion of the materials purchased by the petitioners from the selling dealers, the various commodities manufactured by them in their rolling mills although became by name different commercial commodities, they being specifically enumerated and mentioned in the definition of iron and steel, the assessing authorities are not correct in holding that they become different goods. Applying the same principle, the fact that the jumbo rolls are slit into pancake does not make pancakes into different goods as they are mentioned under the same sub-heading of the tariff. It therefore, follows from the above that the authorities below are not justified in holding that the appellants are not entitled to the certificate requested for. The appeal is accordingly allowed. (S.V. MARUTHI) MEMBER 9. [Dissent per : P.C. Jain, Member (T)]. - I have carefully gone through the judgment proposed by learned sister, but I regret that I am unable to agree with the conclusions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . - 1991 (52) E.L.T. 49l. (ii) Collector of Customs v. Hindustan Photo Films - 1991 (52) E.L.T. 301. (iii) A. Venkateswarlu v. Govt. of Andhra Pradesh - AIR 1978 S.C. 945. (iv) Konark Steel Industries Another v. Sales Tax Officer - 1969 STC 187. (v) Basheer Ahmed v. CCE - 33 ECR 507. (vi) Inter Trade Electronics (P) Ltd. v. Collector of Customs - 1990 (49) E.L.T. 455. 13. The Department on the other hand has contended that the judgment of Madras High Court in Computer Graphics mentioned supra and all other judgments relied upon by the learned Advocate for the appellants are either on the old Tariff or on Import Trade Control (ITC) aspect or on sales tax matters, which are peculiar to the description of goods mentioned in the relevant Tariffs, Notifications, ITC Policy or Sales Tax Laws. None of these judgments, submits the learned Departmental Representative is on the new Tariff Heading 8523.13 which is the subject matter of consideration in this case and which has been set out above. He has submitted that Jumbo Rolls after slitting are converted into a commodity Pancakes, which are known as such in commercial parlance. It is admitted that the name and use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was cleaned by acid and then grinding off the second layer by an emery wheel, so as to expose the brilliant inner layer. The court on that held that the shells were still shells and thus they had not been manufactured into a new and different article having a distinctive name, character or use from that of a shell and the application of labour to an article does not necessarily make it into a distinct article. It will be seen that what was originally a shell, still remained shell though cleaned for ornamental purposes. This case is like that in A.I.R. 1980 S.C. 169 (supra). It is significant to note that in this very case a duty of 30% ad valorem was imposed on coral, cut or manufactured was made exempt from duty. The court observed that this provision clearly implies that but for the special provision imposing a duty on cut coral, it would not be regarded as a manufactured article, although labour was employed in cutting it. What is important is that the Court accepted that if the legislative has treated an article to be a manufacture the argument is not open that the process is not manufacture. It is of significance to note that in American case it was observed that cleaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure in connection with circles, after having taken account of the fact that billets were already subjected to excise duty, it is obvious that the process, by which the billets were converted into circles, was held by the legislature to amount to manufacture. The word manufacture is defined in Section 2(f) of the Act as including any process incidental or ancillary to the completion of a manufactured product. The rolling of a billet into a circle is certainly a process in the course of completion of the manufactured product, viz. circles. In the present case, as we have already indicated earlier, the product, that is ought to be subjected to duty, is a circle within the meaning of that word used in Item 26A(2). In the other two cases which came before this Court, the articles mentioned in the relevant items of the First Schedule were never held to have come into existence, so that the completed product, which was liable to excise duty under the First Schedule, was never produced by any process. In the case before us, circles in any form are envisaged as the completed product produced by manufacture which are subjected to excise duty. The process of conversion of billets into circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying on its earlier decision in the Empire Industries Ltd. - 1985 (20) E.L.T. 179 (S.C.) confirms the view taken by the larger Bench of the Tribunal in the case of Guardian Plasticote Ltd., Calcutta v. Collector of Central Excise, Calcutta Others - 1986 (24) E.L.T. 542. It must be remembered that in the case of Guardian Plasticote, the Tariff Entry had not specifically spelt out the goods in question. Merely by the test of commercial parlance, it was held that the process of bringing into existence bituminized kraft paper or polythene laminated kraft paper from duty paid kraft paper were liable to duty again because the two products were commercially known differently. 16. It is immaterial that the Pancakes and Jumbo Rolls fall under the same Tariff sub-heading, so long as they are known differently in the market. As admitted by the appellants that it is so, it cannot be said that the process of slitting is not a process of manufacture in the instant case, apart from the fact that the legislative intent is clear because of specific entry for Pancakes . 17. I agree with the learned D.R. that the judgments relied upon by the appellant s learned Advocate are based on their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also misplaced. The questions under consideration before the Tribunal in that case were the two entries (1) specific entry Tariff Item No. 37(1) reading as Cinematographic films unexposed as against Tariff Entry 68, the erstwhile residuary tariff entry. Relying on the well settled position of law, the Tribunal came to the conclusion that Tariff Entry 37(1) is more specific to the goods than Tariff Entry 68. It would, thus, be seen that the question before the Tribunal in the Hindustan Photo Films was in a different perspective than what is present in this case. 18. Hence I reject the appeal. (P.C. JAIN) TECHNICAL MEMBER POINT OF DIFFERENCE OF OPINION 19. Whether in the facts and circumstances of this case, slitting of duty paid Jumbo Rolls into Pancakes would amount to manufacture and consequent liability of the Pancakes to duty . (S.V. Maruthi) JUDICIAL MEMBER (P.C. JAIN), TECHNICAL MEMBER 20. [Order per : N.K. Bajpai, Member (T) on reference ]. - In view of a difference of opinion having arisen between learned Member (Technical) and learned Member (Judicial), the following point was referred to the Hon ble President (under Section 129C(5) Customs Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector of Central Excise - 1990 (49) E.L.T. 326 (S.C.) (d) Guardian Plasticote Ltd., Calcutta v. Collector of Central Excise, Calcutta Others - 1986 (24) E.L.T. 542 23. Shri Jain invited attention to the Tariff Heading 8523.13 and submitted that it covered video tapes in certain specified forms only - five of them were clubbed in one sub-heading and one was separated. He submitted that the expression, in the form of .... was restrictive in nature and not illustrative. Thereafter, the learned Counsel handed over a copy of Tribunal s Order No. 612/86-B1, dated 26th September 1986 in the case of M/s. Light Metal Works v. Collector of Customs, Bombay in which it was decided that no duty was leviable on a circle cut out of a duty paid aluminium sheet under Item 27(b) of the erstwhile Central Excise Tariff on the ground that both sheet and circle were listed in the same item and were subject to the same duty. The Tribunal observed that there was no law that the same duty would be paid again simply because the sheet was sheared into a circle. Shri Jain contended that jumbo rolls and pancakes both being mentioned in sub-heading 8523.13, the ratio of the decision was fully applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tapes which were slit into pancakes for being used in video cassettes. 26. Shri Jain referred to the wordings of the sub-heading and submitted that the different forms mentioned in 8523.13 were forms of video tapes and it had been held in decisions cited by him that mere change of form did not amount to manufacture. He also cited the Madras High Court judgment in the case of Computer Graphic Ltd. v. Union of India -1991 (52) E.L.T. 491. As for the judgment of the Supreme Court in the case of Laminated Packaging (supra) cited by learned Member (Technical) in his order, Shri Jain submitted that by the process of lamination the character of Kraft paper had undergone total change which is not the position in the case of slitting of jumbo rolls of video tapes. It cannot be said that pancakes which were obtained by slitting of jumbo rolls were an altogether a new and different article which was the result of any process of manufacture in terms of Section 2(f) of the Central Excises Salt Act, 1944 as interpreted by the catena of decisions cited by him during the previous hearing or in the hearing before me. The principle of Laminated Packaging, judgment (supra) was, therefore, not ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .L.T. 179 and referred to paragraphs 31 to 33. He submitted that the Supreme Court had held that certain processes in the case of fabrics, amounted to manufacture although the fabrics had continued to remain as fabrics. Similarly, the form of video tapes had undergone a change and this change had to be taken note of as a process of manufacture . He also cited the following :- (a) Associated Soap Stone Distributing Co. Pvt. Ltd. v. Collector of Central Excise - 1985 (22) E.L.T. 109 (Tribunal) - Grinding/Crushing of soap stone lumps into soap stone powder has been held by the Tribunal to be a process of manufacture. (b) Dy. Commissioner of Sales Tax (Law) v. Coco Fibres - 1991 (53) E.L.T. 515 (S.C.) - It has been held by the Supreme Court that conversion of coconut husks into coconut fibre amounts to manufacture since fibre is a distinct commodity known in the commercial parlance - Section 5 of the Kerala General Sales Tax Act. (c) Indian Organic Chemicals Ltd. v. Collector of Central Excise - 1991 (55) E.L.T. 285 (Tribunal) - The process of producing soil inoculants as formulated crop - specific branded products from starting point of separating out useful microbes from soi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rthwhile to note that manufacture implies a change, but every change is not 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. See Union of India v. Delhi Cloth Mills (supra) at page 596 of the report. Having regard to the facts found in this case by the Tribunal, which ultimately is the final fact finding authority, we are of the opinion that regard being had to the principles for determining the questions which were correctly applied ;in the decision of the Tribunal, in the facts of this case, the conclusion of the Tribunal is unassailable." 31. He referred to another decision of the Supreme Court in the case of Collector of Central Excise v. M/s. Fine Marble Minerals (Pvt.) Ltd. in which it was decided by the Court that marble slabs sawn from marble blocks are not a commercially distinct commodity. On the question of interpretation of the Tariff Schedule, Shri Jain cited the decision of the Supreme Court in the case of Indo National Industries v. Commissioner of Sales Tax, U.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We do not manufacture any plastic part of V-O but buy the same from the open market. 36. In the note enclosed with the letter claiming exemption from licensing control the appellants have further stated that:-. (a) cutting, slitting or sizing is not manufacture and since they are only converting bigger size jumbo rolls to smaller size pancakes by only slitting process, it does not amount to manufacture. (b) manufacture cannot be said to have taken place unless the goods cease to be of one taxable description and become those of a different taxable description. Therefore, so long as goods continue to fall under the same sub-item, it cannot be said that manufacture has taken place because there cannot be two manufactures attracting two different stagers under the same item or sub-item. (c) Mere change in physical form or shape of a substance or of a commodity would not, by itself, lead to the conclusion that a new article has been manufactured. It is claimed that in their case only physical form has changed i.e. from bigger width of rioll of about 13" width the same is slitted to small width roll of and no different commodity has been manufactured; both raw material a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is that pancakes are different from jumbo rolls not only in name but also in their use, even if they are two forms of video tapes. As long as these are specified in the sub-heading of the tariff schedule, they become liable to duty because manufacture takes place from one form to another. The Trade Notices were issued before the Tariff Heading 8523 was split up into sub-headings in 1988 by which specific form of video tapes have been incorporated. The clarification given in the Trade Notices are, therefore, no longer applicable. The orders of Collector of Central Excise (Appeals), Bombay, dated 19th January 1989 in the case of Inter Trade Electronics (Pvt.) Ltd., Bombay holding that slitting of jumbo rolls of audio/video magnetic tapes into pancakes did not amount to manufacture related to the tariff sub-heading 8523.00 before it was split up, and is no longer applicable since the headings have been divided into several sub-headings and one such sub-heading viz. 8523.13 specifically mentions different forms of video tapes. 38. The question that will finally have to be answered is whether by slitting the jumbo rolls and calling them pancakes , a new marketable commodity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cleared for home consumption as under of :- (1) Pancakes - Rs. 9,50,118.10 (2) Cassettes - Rs. Nil This is to state that under the present Central Excise Rules, they are not required to obtain Central Excise Licence. Sd/- Illegible." 40. It has been stated in, the appellants letter, dated 20th April 1989 that a certificate is required to be submitted to the Joint Chief Controller, Imports Exports, Bombay for issuance of Advance Licence for importing 1,500 jumbo rolls and exporting 30,500 pancakes. This statement itself would show that pancakes which are required to be exported are marketable commodity and, if these were not so, they could not be exported. Similarly, the second document - namely, the certificate - makes it clear that during 1988-89 the appellants had cleared pancakes valued at Rs. 9,50,118.10 for home consumption and the clearance of cassettes was nil. It is evident that unless pancakes were a marketable commodity, where was the question of cleaning them for home consumption and that too, of such high value? That the appellants have not cleared any cassettes during that period is also significant and speaks itself. In the circumstances, the appellan ..... 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