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TMI Blog1999 (6) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... pacity of 20,000 M.T. at Seri Narasannapalem within the jurisdiction of Hunuman Junction Range of Vijayawada Division. They had obtained approval from the following authorities : (a) The Director of Factories, Andhra Pradesh, Hyderabad vide letter No. D.Dis.Dl/VJA-I/22950/97, dated 22-9-1997. (b) Andhra Pradesh Pollution Control Board, Hyderabad vide Order No. PCB/C.Estt/RO-VIJ/AEE-N/97-10101, dated 30-8-1997. (c) The Electrical Inspector, Vijayawada, vide Lr No. EI/VIJ/HT/Tech/CR (E)/D No. 379/98, dated 126(sic)-4-1998. (d) Environmental Engineer, Regional Office, Vijayawada vide letter No. K. 819/PCB/R)-VJA/98-324, dated 19-3-1998. They had also produced receipt No. 2290/SIA/LMO/97, dated 1-8-1997 from the Govt. of India Ministry of Industry, SIA, EAU, New Delhi wherein proposed item of manufacture has been indicated as paper cut to size or shape not elsewhere specified and the proposed capacity indicated was 20,000 M.T. In the said unit to be set up they proposed to receive duty paid paper in reel form from their Rajahmundry unit and convert the same into sheets by cutting into required sizes and after packing they intend to clear the same on payment of duty. They appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input used in or in relation to the manufacture of the packed paper. They also relied upon the judgment rendered by the Hon ble Supreme Court in the case of Standard Fire Works Industry, Sivakasi wherein it has been held that if power is used for cutting of steel wire outside the factory then the wire is used for the manufacture of fire works in the factory, then the assessee cannot claim that the fire works are manufactured without the aid of power even though the products viz. fire works (crackers) are made without power, because the process of making wire is incidental to the manufacture of fire works. They also relied upon the decision of the Hon ble Supreme Court in the case of C.C.E. v. Rajasthan State Chemical works reported in 1991 (55) E.L.T. 444 wherein the Hon ble Supreme Court held that if paper is used for handling raw materials prior to commencement of actual processing, still it should be considered that power is used in the manufacture and therefore goods are not exempt under Notification 179/77 which granted exemption from duty if the goods are manufactured without the aid of power. Therefore, they urged before the Collector (Appeals) that the processes carried ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be carried out which does not come within the purview of the meaning of manufacture under Section 2(f) of the Central Excise Act, 1944. 4. We have heard Shri Sankaravadivelu, learned DR for the Revenue and Shri M. Chidananda Rao, learned Consultant for the respondents. Both the sides reiterated their pleas in terms of the submissions made before the authorities below. The learned Consultant filed all the judgments which are relied upon by him to show that the processes carried by them amounted to process of manufacture and hence the final product is goods and the department itself fixed the RG1 stage which is the stage the respondents removed the goods. They contend that the judgment in the case of Bhadrachalam Paper Boards cited by the Revenue in their appeal memo does not deal with the aspect pertaining to manufacture of goods but the High Court considered aspect of grant of proforma credit under Rule 56A in respect of wrapping paper only. The learned Consultant after relying upon several judgments on manufacture contended that the process incidental or ancillary to the completion of manufactured product would result in goods and hence their prayer for issue of licence p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A of the Central Excise Rules and 175 of the said rules. Rule 174 lays down that every person who cures, produces, manufactures carries on trade, shall be required to take licencee and shall not conduct his business in regard to such goods otherwise than by authority and subject to the terms and conditions of licence granted by duly authorised officer in the proper form. Under this rule, several notifications have been issued with regard to the various products that are considered as manufactured for the purpose of issue of licence. Rule 174A refers to the power of Central Govt. to issue notification in official capacity to exempt from the operation of Rule 174A pertaining to goods or class of goods which are fully exempt from the duty of excise leviable thereon either unconditionally or subject to fulfilment of conditions and also in respect of any class of manufacturers to get their goods manufactured on their account or through other person or persons and also in respect of any goods or class of goods which are produced or manufactured in free trade zone. Rule 175 lays down procedure for obtaining licence. 7. The term manufacture is defined under Section 2(f) of the Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter notes to the Schedule to the Central Excise Tariff Act amounting to manufacture that would be the criteria for issue of licence. Such manufacture should result in production of specified goods in the schedule which are subject to levy of duty. In the present case, the respondents contend that there is emergence of goods at their instance and therefore they have to be issued with licence. They filed all the necessary documents in support of their contention to the concerned jurisdictional Supdt. of Central Excise and in terms of their application form dated 1-12-1997 the Supdt. of Central Excise Hanuman Junction Range by his letter dated 24-12-1997 informed them as follows : During the course of scrutiny of your application cited for registration under the Central Excise Law, it is visualised that the purpose of manufacturing activity (conversion of reels into sheets by intending to install cutters), noted therein has not been covered under any provisions of Central Excise law. Therefore, the issue of certificate of registration under Central Excise law is not considered. As can be seen from the letter extracted above, the Supdt. of Central Excise has not given any find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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