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TMI Blog1993 (6) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... near ESI Corporation office, Jullundar on 18-6-1983, the preventive staff observed that the appellant had cleared Iron Channels (other than slotted channels) falling under Tariff Item No. 26AA(ia) of the first schedule of the Central Excises Salt Act, 1944 weighing 883.460 m.t. during the period 1-8-1980 to 31-7-1983 without obtaining Central Excise L4 licence, without having got approved classification list, without issue of gate-pass and without payment of CED amounting to Rs. 3,20,695.98 and without observing other necessary formalities under Central Excise laws. 3. It is alleged that the said goods were manufactured from flat iron purchased by them from the market/other manufacturers upto December 1982 and thereafter from flat iron received by them from their sister concern situated near Canal bridge, Kapurthala Road, Jullundar and partly purchased from the market/other manufacturers with the help of rolling mills installed in the party s premises. It is further stated that these flats (2 mm to 10 mm in thickness) so received were heated in muffle furnace with the steam coal as fuel, to an extent of 600oC to 700oC and then fed in the rolling mills (i.e. two rollers fitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r blending do not loose its original characteristics. The process of bending does not increase or decrease its thickness. It merely brings a change in the physical form and hence it does not amount to manufacture. They contended that Rule 9(1) cannot be invoked in this case as there had been no clandestine removal and hence there had been no violation of Rule 9(1) of the Central Excise Rules, 1944 and in this contract they relied on a few rulings of High Court and Tribunal. They stated that the demands were all time-barred and not enforceable. They also pleaded that penalty cannot be imposed on them and relied on the ruling of Hon ble Supreme Court rendered in the case of Hindustan Steel Co. Ltd. v. State of Orissa as reported in AIR 1977 SC 252. 6. The ld. Collector has rejected their contentions and has held that Item 26AA(ia) makes no distinction between one type of channel and other types, it says `channel (other than slotted channels ) thus what is excluded is slotted channel and other channels are covered by it. On the other hand, Item 68 covers goods not elsewhere specified and therefore, would not cover the product under dispute which stand classified under Item 26AA(ia) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion list on 18-1-1982. It is further contended that there is no process of rolling, forging or extrusion and hence the goods do not fall under T.I. 26AA(ia). The party had been calling the item in loose terms as channels; while it were not so - It is contended that the bought out item flat continued to remain so even after bending and there was no reduction in size by any process of rolling and hence the resultant product did not arise out of a process of manufacture. The item cleared was a Tonga wheel with rubber fitted over it and hence it cannot be termed as channel and it cannot be classified under T.I. 26AA(ia) and it was only an article of iron and fell under T.I. 68 and no duty was leviable. Shri Gopal Prasad relied on the term channel as appearing at page 340 of `The World Book Dictionary volume one which gives the meaning as a trough shaped bar of rolled iron steel, forming in cross section three sides of a rectangle; channel iron `channel iron or bar, as a flauged bar of rolled or steel, shaped so that its cross section form three sides of a rectangle. Chambers Science and Technology Dictionary gave the meaning of `channel at page 150 as Channel (Eng.) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd have perused the records. The question that arises for determination is the correct classification of the product manufactured by the appellant and whether they are to be considered as `channels for classification under T.I. 26AA(ia) of the first Schedule of Central Excise Tariff and as to whether larger period can be extended under Rule 9(1) of the Central Excise Rules, 1944 and as to whether penalty is imposable for alleged contravention of Rules. 11. The show cause notice alleges that the party was manufacturing iron channel from flat iron purchased by them from market/other manufacturers upto December 1982 and thereafter from flat iron received by them from their sister concern. These flats (2 mm to 10 mm in thickness) were heated in muffle furnace with the steam coal as fuel to an extent of 600oC to 700oC and then fed in the rolling mills (i.e. two rollers fitted in two stands and run with 15 BHP Motor) working with the aid of power and the resultant goods so manufactured are of 6 feet to 14 feet in straight length of `. . . shape and cleared as it is to various parties without payment of duty. As can be seen from this description of the process, the flats of 2 mm to 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anges - Dimensions, Weight and Geometrical Properties . There is a Explanatory note. One of the para states that of the three types of channel (junior, light weight and medium weight) Sections covered in IS : 808 - 1964 only medium weight Channels are being produced in the country at present. They have, therefore, been deleted from IS : 808 - 1964 and are covered in this part of IS : 808 with the modifications above. Medium weight beam (MB) and equal and unequal leg angle sections have already been covered in Parts I,V and VI IS : 808. The other beam and channel sections will be covered in separate parts of IS : 808 in due course . 12. As can be seen from the reading of this IS : 808 (Part III) 1979, the channels has to meet dimensions and specifications in terms of weight and geometrical properties. It is the appellants specific case that the goods cannot be called as `channels as they are not known in trade as such. They are wheels for Tonga and Rehri. The ld. Collector has not given any findings on this aspect of the matter but merely states that Item 26AA(ia) does not make any distinction between one type of channel and other types. We are not agreeable with this finding. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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