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TMI Blog1995 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... he Collector in his order has held that though galvanisation has been held to be not amounting to manufacture yet the question in this case is whether galvanisation charges should be included in the assessable value of galvanised M.S. pipes sold by the appellants. The Collector noted that M.S. pipes which are formed in their tube mill are subjected to various process like grinding, threading, facing, lacquering and hydrotesting. Some pipes are sold at this stage while the others subjected to a further process of galvanisation; the Collector noted the appellant s submissions that some value is added to the M.S. pipes in the process of galvanisation and that normal price of the galvanised M.S. pipes is higher than ungalvanised pipes. The Collector found that galvanisation enriched the value of the goods and hence charges for the purpose should necessarily form part of the assessable value of the galvanised pipes in the light of the law laid down by the Supreme Court in the case of Bombay Tyre International, reported in 1983 (14) E.L.T. 1986 wherein it was held, inter alia, that expenses incurred on account of several factors which have contributed to the value of the excisable goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is necessary for the completion of the manufacture of galvanised pipes. The learned Senior Departmental Representative also relied upon the Supreme Court judgment reported in 1990 (47) E.L.T. 326 to say that lamination of kraft papers in that case was found to bring out new product laminated paper which the Supreme Court held was a product different from kraft paper to be subjected to the duty again and the assessee in such a case can also claim input duty relief like proforma credit to mitigate the duty burden when both the products fall under same tariff as in the case of papers. 4. The submissions made by both sides have been carefully considered. The appelllants herein are relying upon the fact that following the Supreme Court decision reported in 1989 (42) E.L.T. 513 (SC) in the case of Gujarat Steel Tubes Ltd. v. State of Kerala that galvanisation does not amount to manufacture the Department cannot levy duty once again on galvanised pipes after having collected duty at the stage of removal M.S. black pipes. However, the question here is that of determining the assessable value of the galvanised M.S. pipes. In this regard the Supreme Court judgment in the case of Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essable value, the Supreme Court has held that for the purpose of levy of excise duty, the value of the article is the full intrinsic value of the article inclusive of the materials and components supplied free by the customer and irrespective of the fact that no expenditure was incurred by the manufacturer on such components . Thereafter the Supreme Court observed that the value has to take into account the full commercial value including that of the wheel sets but for the exemption. The same concept of assessable value as reflecting the full commercial value or the intrinsic value has been followed in another Supreme Court judgment in case of Ujagar Prints, Etc. Etc. v. Union of India and Others, reported in 1988 (38) E.L.T. 535 (S.C.). Valuation of grey fabrics at the hands of job workers who subjected grey fabrics to the processes of bleaching, dyeing, printing etc. was involved. These processes were held to be processes amounting to manufacture. On the question of valuation of the processed fabric it was contended that the assessable value should be only the job work charges received and cannot be the selling price of the processed fabrics by their customers who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the enrichment of the value of the goods and its marketability have to be considered. That a particular process is not one amounting to manufacture will not be relevant when what is sought to be done is to determine the value of the goods for assessment. Admittedly, price charged by the appellants for the galvanised pipes includes cost incurred by them on galvanisation which enriches its value and adds to its marketability in the trade. Surely the appellants would not be selling galvanised pipes to a customer who is prepared to pay them only the price they charged for the ungalvanised pipes. It is to be noted in this context that the appellants had in the relevant column in the classification list filed before Collector declared M.S. pipes black and galvanised pipes as their products. In such a situation the mere fact that galvanisation was done subsequent to paying duty on M.S. black pipes cannot by itself be a ground for not includinig the cost of galvanisation in the assessable value of black pipes subjected to the process of galvanisation and cleared by them. That process may not amount to one of manufacture; but it adds to the intrinsic value of the product to make up i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a complete marketable product, the manufacture of which is an excisable event, though the actual collection, as in the generality of cases, is postponed to the stage of clearance for captive consumption or for delivery on sale. About 30% of such black pipes and tubes are cleared for delivery of sale at the factory gate on payment of excise duty. The rest of the pipes and tubes (70%) are galvanised in the galvanising shed in the same premises and after galvanisation, cleared for delivery of sale at the factory gate. The dispute in this appeal is whether in regard to 70% of the products cost of galvanisation is to be included in the assessable value for the purpose of excise duty. The appellant also purchases black pipes and tubes from the market and galvanises and sells the same for which admittedly no excise duty is demanded, as the department has accepted that galvanisation is not manufacture for the purpose of the Act. 8. According to the appellant, since galvanisation is not manufacture for the purpose of the Act, the cost of galvanisation is not be included in the assessable value. Appellant relies on Collector of Customs and Central Excise and Another v. Oriental Timber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that actually yarn was not produced in any intermediate stage of an integrated process of manufacture. Yarn produced was dutiable and fabric was dutiable. There was no separate excisable event at the stage of sized yarn. It was held that no distinction could be made between unsized yarn and sized yarn, since the unsized yarn when converted into sized yarn does not lose its character as such. This decision is not relevant for the purpose of the present case, since we are not dealing with a case of manufacture of pipes and tubes being galvanised and the galvanised pipes and tubes being used in the manufacture of some other product. The above decision was followed in Ahmedabad Mfg. and Calico Printing Co. Ltd. v. Union of India, 1993 (63) E.L.T. 601 (SC). 11. In J.K. Glass Industries Ltd. case, 1992 (62) E.L.T. 291, the assessee who manufactured glass and glasswares contracted to supply bottles with printed logo of his customers. The question for consideration was whether the cost of printing was to be included in the assessable value for the purpose of excise duty. The court held that taxable event occurred when manufacture of glass bottles was complete and by printing logo, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcial product. 13. The above conclusion is consistent with the principles of valuation as explained by the Supreme Court in the Union of India Ors. v. Bombay Tyre International 1983 (14) E.L.T. 1896 (SC). The Supreme Court observed :- 28. In every case the fundamental criterion for computing the value of an excisable article is the price at which the excisable article or an article of the like kind and quality is sold or is capable of being sold by the manufacturer, and it is not the bare manufacturing cost and manufacturing profit which constitutes the basis for determining such value. 49........ Now, the price of an article is related to its value (using this term in a general sense), and into that value how poured several component, including those which have enriched its value and given to the article its marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included . 13. It is accepted that the process of galvanisation does not amount to manufacture for the purpose of the Act. That does not mean that ..... 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