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TMI Blog1996 (10) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... he Collector was whether the extended period of 5 years under proviso to Section 11A was applicable and held that it was applicable. 4. The fourth issue was about imposing penalty twice. 5. The facts of the case, in brief, are that the appellants are engaged in the processing of duty paid bitumen to various grade of Blown Bitumen and started production of blown bitumen in 1980. The appellants started production of bitumen (aqueous) emulsion in 1984 and manufactured bitumen according to ISI specification No. 3117. 6. The appellants entered into two separate agreement on 30-10-1981 with M/s. United Enterprises and M/s. Mahendra Harish Brothers for manufacture of bituminised hessian/cotton cloth. Under these agreements, the goods were to be manufactured under the supervision and on the basis of technical know-how provided by M/s. Indian Cable Co. The agreements stipulated that the appellants shall not undertake manufacturing of the products covered by the agreements for any other party and will not sell the products ordered by the firms. It was also provided in the agreements that the appellants shall not engage in manufacturing and sale of goods covered under the agreements for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product having distinct name, character and use came into existence. The ld. Counsel also cited and relied upon the decision of the Hon ble Madras High Court in the case of Coromandal Prodorite Pvt. Ltd. v. Union of India and others reported in 1985 (20) E.L.T. 257 in which it was held that synthetic resin in solid form mixed with alcohol to convert it into liquid form does not amount to manufacture because the end-product which came into existence is not a product different in character, nature and use. The ld. Counsel also cited and relied upon the decision in the case of Sandoz India Ltd. v. UOI and others reported in 1980 (6) E.L.T. 696 in which the Hon ble Bombay High Court held that if a certain process merely changes the physical form of a substance without bringing any change in the chemical composition of resulting in any chemical reaction, then such a process cannot be equated with manufacture as it does not bring into existence a new product. The ld. Counsel also cited and relied upon the decision of this Tribunal in the case of Jyoti Laboratories v. Collector of Central Excise, Cochin reported in 1994 (72) E.L.T. 669 = 1994 (50) ECR 36 in which this Tribunal held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with the application for removal of the goods, a declaration shall be filed by the assessee. He submitted that the assessees were working under the S.R.P. therefore, the condition regarding declaration mentioned in the Notification was not capable of fulfilment. He submitted that it was a settled law that law does not require fulfilment of conditions which are incapable of fulfilment. In support of this contention, the ld. Counsel cited and relied upon the decision of the Apex Court in the case of Raj Kumar reported in AIR 1987 (SC) 2195. The ld. Counsel also referred to Extract of Maxwell on the Interpretation of Statutes 12th Edition by P. St. J. Langan reading as Enactments which impose duties upon conditions are, when these are not construed as conditions precedent to the exercise of a jurisdiction, subject to the maxim, lex non cogit ad impossibilia. They are understood as dispensing with the performance of what is described when performance of it is impossible. He submitted that this doctrine was followed by the Tribunal in the case reported in 1987 (29) E.L.T. 275 (Tribunal). The ld. Counsel also submitted that this Tribunal in the case reported in 1991 (53) E.L.T. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de from duty paid jute fabrics and the same is otherwise covered under Rule 56A, further duty is not required to be paid on bituminised hessian cloth; that the test memo on the product describes the product as wrought proof bituminised hessian; that Notification No. 53/65 covers wrought proof jute products from payment of so much of duty of excise leviable thereon as is in excess of the duty paid on unprocessed jute used in the manufacture of jute products. The ld. Counsel submitted that insofar as clearances during the year 1986-87 are concerned, Notification No. 53/65 as amended continues the benefit of exemption; that the said Notification refers to the said products falling under Chapters 53, 59 or 63. Since the product has been classified under Heading 59.09, therefore, it would be exempt for the year 1986-87. In respect of bituminised cotton cloth, the test report indicates that cotton does not predominate in weight and therefore, it was to be classified under Tariff Item 68. The ld. Counsel submitted that since bituminised hessian cloth was assessable to duty under Tariff Item 22A, the exemption for Tariff Item 68 goods, has to be reworked under Item 68 up to 30 lakhs for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the appellants submitted that the department has taken sale-price of customer which is incorrect; that the valuation has to be adopted in accordance with the law laid down by the Supreme Court in the case of Ujagar Prints and the duty demand has to be reworked. The ld. Counsel submitted that the department has to consider the cost of materials + job charges. In support of this contention, the ld. Counsel cited and relied upon the judgment of this Tribunal in the case of C.C.E. v. Pharmasia reported in 1996 (63) ECR 380 (Tribunal). Replying to the contentions of the ld. Counsel, the ld. DR submitted that the value is to be determined under Section 4 for purpose of levy of duty. He submitted that in view of the Apex Court decision in the case of Ujagar Prints, the value is to be determined according to the directions of the Apex Court in the case of Ujagar Prints. 16. The ld. Counsel also submitted that the demand is time barred inasmuch as it has been the view of the department also at the material time that the supplier of raw material alone is the manufacturer; that this position is clarified by the Ministry of Finance s letter No. 336/106/80-TRU, dated 14-5-1982; that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding factor for finding out whether the process of conversion of bitumen into bitumen aqueous emulsion is a process of manufacture but we can certainly take into consideration the technical inputs given in the ISI specification. We find that by the application of the process indicated above, a new product having a distinct character, name and use comes into existence. In the instant case, the bitumen aqueous emulsion according to the statement of the appellants was used for surfacing and roofing. Having regard to these discussions, we find that case law cited and relied upon by the appellants is distinguishable and hold that the process of conversion of bitumen into bitumen emulsion is a process of manufacture. 19. Now the question is whether bitumen aqueous solution is eligible for the benefit of Notification No. 8(9)/55-C.E., dated 12-3-1955 as amended. The appellants argued that the above Notification is a conditional one but the conditions were satisfied by the evidence produced in the form of challans showing that the product conforms to IS : 3117-1965; that there was an agreement with the purchaser which showed that the product was meant for surfacing road as also was sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity was covered by Self Removal Procedure and therefore, there was no question of filing any application for removal as contemplated in Rule 52 of the Central Excise Rules, 1944. 22. The second point that was argued before us was that since bituminised hessian cloth/cotton cloth were manufactured for and on behalf of M/s. United Enterprises and M/s. Mahendra Harish Bros. and therefore, the appellants were not the manufacturers but M/s. Mahendra Harish Bros. and M/s. United Enterprises were the manufacturers. In support of this contention, it was argued that raw material was supplied by M/s. Mahendra Harish Bros. and M/s. United Enterprises; that the appellants were only charging processing charges; that the suppliers of raw materials were exercising effective supervision and control over the manufacturing activity; that there were agreements with the suppliers of raw materials; that in the agreements, the appellants allowed supervision over the manufacturing activity, allowed inspection of the book accounts and control over the management; that all these [indicated] that the goods were being manufactured for and on behalf of M/s. Mahendra Harish Bros. and M/s. United Enterprises ..... X X X X Extracts X X X X X X X X Extracts X X X X
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