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TMI Blog1993 (11) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... called studs manufactured by the appellants herein. They are the manufacturers of two and three wheeled motor vehicle in the manufacture of which studs are made according to the specification to the appellants. They got the studs manufactured on job work basis to whom they supplied the raw-material consisting of steel bars. The job workers processed the raw-material and returned it to the appellants. The material received from the job workers are subjected to certain process by the appellants in their own factory before using them captively in the manufacture of scooters. These processes are heat treatment or annealing to ensure hardness and to increase the tensile strength, phosphatizing to make the special studs rust resistant and chrome or other plating to give the special studs a brighter finished appearance. The appellants were issued various show cause notices from time to time demanding duty on the studs manufactured treating the appellants as the manufacturer and these demands were confirmed by the jurisdictional Assistant Collector of Central Excise, Pune-I in his order dated 17-10-1985. In these orders the Assistant Collector held that the appellants were the manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected by the Collector (Appeals) who again followed the order dated 26-2-1988 passed by his predecessor and the appeal against this order of the Collector (Appeals) before the Tribunal, is dealt with in Appeal No. E/4098/89-D. 2. Shri E.P. Bharucha, Senior Counsel with Shri M.P. Bharucha, learned Counsel appeared for the appellants. It was contended that the process of heat treatment phosphatising and chrome plating carried out by the appellants on the cut and grooved rods received from their job workers cannot amount to manufacturing. It was submitted that the processes of phosphatising and chrome plating is done only to make the studs rust proof and give them a final finish and heat treatment is to improve the tensile strength. The job workers to whom the material are sent are independent manufacturers and it is not the case of Department that they are the dummies of the appellants. The job workers are not under appellants control or supervision. The learned Counsel, thereafter, referred to a series of case laws on this subject - 1987 (27) E.L.T. 460 (Tribunal), in the case of Techma Engineering Enterprise, Calcutta v. Collector of Central Excise, Calcutta to say that indepen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en followed by the Allahabad High Court in the case of Commissioner of Sales Tax, Uttar Pradesh, Lucknow v. Tata Iron and Steel Company Ltd., reported in 1976 (38) STC 10. The learned Counsel further referred to the decision of the Tribunal in the case of Collector of Central Excise, Aurangabad v. Anil Chemicals (P) Ltd., Aurangabad, reported in 1985 (21) E.L.T. 889 (Tribunal) to say that mere improving the quality or purity of a material does not amount to manufacture creation of new and different goods. Further reliance was placed on the Supreme Court decision in the case of Atul Glass Industries Ltd. and Others v. Collector of Central Excise and Others, reported in 1986 (25) E.L.T. 473 (S.C.) wherein the Supreme Court held that wind screens, rear screens and door screens of Motor vehicle would fall for classification under Item No. 68 CET as goods not elsewhere specified and these are not to be classified as glass and glassware under Item 23A(4) or under 34A of Central Excise Tariff as specified Motor Vehicle parts. Therefore, it was argued that in this case the studs cannot be classified under Item 52 of CET but would fall for classification under Item No. 68 CET being also exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Others, reported in 1986 (26) E.L.T. 211 (Mad.) wherein the High Court held trimming or chamferring of brake lining is manufacture. The learned Senior Departmental Representative further cited the case law reported in 1986 (25) E.L.T. 54 (Tri.) in the case of Mohanlal Roopchand Parmar v. Collector of C. Excise, Bombay-II to say that further process of heat treatment of printed saries necessary for making them marketable is hence to be considered as a process of manufacture. Citing the Tribunal decision in the case of Addisons Co. Ltd. v. Collector of C. Excise, reported in 1990 (48) E.L.T. 281 (Tribunal), the learned Senior Departmental Representative argued that the Tribunal held in that case that applying anti-rust and anti-corrosion oil to tools is incidental or ancillary to the completion of manufacturer to finished tools. The Tribunal was considering in that case an issue under the Modvat credit scheme. As regards the classification of the studs the learned Senior Departmental Representative contended that in the Atul Glass Industries Ltd. and Others case decided by the Supreme Court, the Court found wind screens to a motor vehicle part as falling under Item 68 Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the studs are not marketed as spare parts or used as a component parts without the above process at the hands of the appellants. This would, therefore, make these process carried by the appellants on the threaded material as essential processes which makes the studs usable and marketable. Although these processes do not bring any change of shape in the part yet it is apparent that without these processes, the part would be sub-standard lacking in rust proof quality and tensile strength. This would go to support the conclusion drawn by lower authorities that these processes carried by the appellants on the studs are those which are incidental and ancillary to the completion of the manufacture of fully finished studs to be used as component parts in two/three wheeler scooters, satisfying the terms of definition of manufacture in Section 2(f) of the Central Excises and Salt Act, 1944. In such a view of the matter, the case law cited to show that heat treatment rust proofing by themselves are not processes of manufacture will not be material to the facts of this case. As regards the position of the job workers, it is seen that the job workers are in the nature of hired labo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... language in Item 52, it would appear that fastening in the strict sense may not be the only function of nuts. Fixing may also be a kind of fastening. In Simmonds Marshal Ltd. v. M.R. Baralikar, Assistant Collector of Central Excise, Pune - 1985 (22) E.L.T. 378 the Bombay High Court held that `nylocself looking nut , is a kind of nut and is classifiable under Item 52. The principles to be adopted for classification for goods under Item 52 Central Excise Tariff is further brought out in the Jaishri Engineering Co. (P) Ltd. decision (supra) wherein the Supreme Court observed The question is, however, not as to what is the process facilitated as a result of the nuts, but the question is, which the Tribunal itself posed is whether the nuts are fasteners or do they have any other independent function . In the present case the goods are described as studs by the appellants and also understood in the market as studs designed for use in two/three wheeler vehicles and these studs have admittedly a fastening function which would also include within its ambit fixing which may also be a kind of fastening as observed by the Supreme Court supra. These being so Item 52 Central Excise Tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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