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TMI Blog2002 (12) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... duty amount but there is no specific order regarding stay of the penalty. 2. Shri. V. Sridharan, learned Advocate for the appellant argued the case at length and made detailed submissions to the following effect :- A.1 The activity undertaken is of mere slitting of the flat rolled products, namely, HR coils, CR coils and SS coils of width more than 600 mm. The slit products were either of more than 600 mm. width or of less than 600 mm. width. A.2 Vide circular dated 7-9-2001, the revenue has not disputed the position that when the slit products are of more than 600 mm, the process of slitting the coils would not amount to manufacture since the starting materials is coil of width more than 600 mm. and the slit product is also of width 600 mm. In other words, even according to the revenue itself the process of slitting had not resulted in emergence of new product with distinct name character or use when the slit coil is of more than 600 mm. width. If that is the case when the slit coil is of width more than 600 mm, the position cannot be different if the slit coil is of width less than 600 mm. A.3 The activity undertaken is slitting alone. The flat rolled products namely, H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eat a process as amounting to manufacture, new and different article must emerge having distinct name, character and use. As submitted above, the slit HR coils, CR coils and SS coils did not have distinct name, character or use. They are also called HR coils, CR coils and SS coils. By mere slitting and cutting of these coils, no character of the same would change. The use of the product also remains the same. Hence, the process of slitting does not amount to manufacture. B.4 When the tariff classifies flat rolled products of iron or non-alloy steel of a width 600 mm or more under Heading 72.08 and the flat rolled products of iron or non-alloy steel of width less than 600 mm. under Heading 72.11, it would only mean that if a manufacturer manufactures flat rolled products of width more than 600 mm and after slitting the same into flat rolled products of width less than 600 mm such manufacturer has to pay duty at the rate applicable to the flat rolled products of width less than 600 mm. It does not mean that if a person buys duty-paid flat rolled products of width more than 600 mm and slits the same into fiat rolled products of width less than 600 mm the process undertaken by him wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - UOI v. J.G. Glass Industries Ltd. (b) 1998 (29) RLT 222 (Tri.) - Garware Polyester Ltd. v. CCE (c) 1991 (52) E.L.T. 392 (Tri.) - Rexor India Ltd. v. CCE Affirmed by Supreme Court on 17-8-95 B.7 The aforesaid submission is also supported by the following decisions wherein it has been held as under :- (a) Computer Graphics Pvt. Ltd. v. UOI [1991 (52) E.L.T. 491] 9. The main question for consideration is, whether the petitioner carries on any manufacturing process? It has already been seen that what the petitioner does is to import jumbo rolls of graphic art films and it cuts these films into sheets of various sizes, which are thereafter packed and sold in the market. The alleged manufacture is the cutting of jumbo rolls into shorter lengths called flats. 12. The contention of the respondents that merely because there is a separate Tariff Entry for flats as distinct from jumbo rolls, the flats cut from jumbo rolls can be classified as a manufactured product, cannot be sustained. Tariff Entry 37.01 and Tariff Entry 37.02 deal with two different resultant products of manufacture. If a person manufactures photographic flats and films, then that ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbo rolls of duty-paid tissue paper into smaller sixes and packing the products for sale in the market should also be excisable, it would have enacted such intent into law through appropriate Section Note or Chapter Note in the Central Excise Tariff. Such Section/Chapter Note is conspicuously absent in the Tariff. Therefore, it has to be held that the existence of a separate Tariff Entry (TH 48.18) for the facial tissues, napkins etc. would not, by self make these products excisable. The apex court s decision in Prabhat Sound Studios (supra) is supportive of this view. 8.3 Their Lordships of the apex court, in the above case, were considering the question whether the activity of recording of sound on blank cassette tapes could be called manufacture for the purpose of levy of Central Excise duty. The blank tapes were covered by Entry (3) under Tariff Item 59 of the erstwhile Central Excise Tariff, while the sound-recorded tapes stood classified under entry (4) of the said T.I. 59. Their Lordships observed that a manufacturer of cassette tapes might manufacture the tapes and, at his option, sell the blank tapes or record sound on them and thereafter sell the sound-recorded tapes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y yarn and dyed yarn are specified under two different tariff item and this itself recognises that they are two different goods. However this decision did not consider the earlier decision of three members bench decision in the case of Moti Laminates Pvt. Ltd. v. CCE - 1995 (76) E.L.T. 241 (S.C.) wherein at Para 6 it was held that where the goods are specified in the Schedule of the Central Excise Tariff they are excisable but whether such goods can be subjected to duty would depend on whether they were produced of manufactured by the person on whom duty is proposed to be levied the relevant portion of the above decision of the Supreme Court in Moti Laminate s case is under :- 6. The duty of excise is leviable under Entry 84 of List I of the Seventh Schedule on goods manufactured, or produced. That is why the charge under Section 3 of the Act is on all, Excisable goods , produced or manufactured . The expression excisable goods has been defined by Clause (d) of Section 2 to mean, goods specified in the Schedule. The scheme in the Schedule is to divide the goods in two brand categories - one, for which rates are mentioned under different entry and other the residuary. By th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h when compared to the bench which decided the Lal Woolen Silk Mills case. This submission is fully supported by the decision of the Supreme Court in the case of UOI v. Raghubir Singh 1989 (2) SCC 754 = AIR 1989 S.C. 1933 and another decision of the Supreme Court in the case of Mahanagar Railway Vendor s Union - 1994 Supp (1) SCC 609. E. The test of manufacture is emergence of new and distinct commercial product. Where there is no essential difference in identity between the original commodity and the processed article, it cannot be said that new and distinct product has emerged. The fact that the processed article is known by different name will not determine the question as to whether manufacture has taken place. This submission is supported by the decision of Gauhati High Court in Sundari Rubber Works v. State of Tripura - 1991 (81) STC 200 (Gau). The relevant portion of the decision is extracted below : It is, however, clear that though with every process a commodity experiences a change, it is only when the change, or a series of changes, takes the commodity to a point where it can no longer be regarded as the original commodity but instead is recognized as a new and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture in the market, the test of manufacture as envisaged by the Supreme Court is not fulfilled. As a result the appeal of the assessees succeed and are allowed. 5. Shri M.H. Shaikh, learned J.D.R. appearing for the Revenue stated that after slitting, the tariff items changed and therefore duty is payable again. He also drew attention to Para 3 of the impugned adjudication order which reads as follows :- The assessee had filed classification List Nos. 194/88-89 w.e.f. 1-3-89, N. 11/90-91 w.e.f. 3-4-90, N. 102/90-91 w.e.f. 20-2-91, N. 29/91-92 w.e.f. 28-7-91, 265/91-92 w.e.f. 1-3-92 wherein they had declared that processes like cutting/shearing and slitting is amounting to manufacture in such cases where Modvat credit is taken. 6. Further, he drew attention to Para 49 of the impugned order wherein it has been stated that :- Moreover, the conversion of flat rolled products into each other in Iron Steel Industry, requires the deployment of big machines with sophisticated features and even a single operation would require the setting up of a big plant. Therefore, technologically as well, the said conversion can be described as a manufacturing process. 7. The main poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... described as flat rolled product even when the tariff sub-heading changes (Para 12), the decision notes later on that since the goods after slitting continued to be known by the same nomenclature in the market, the test of manufacture is not fulfilled (Para 15). To us, the conclusion appears to be based on erroneous reasoning as a group of products falling under different tariff heading and sub-headings broadly described as flat rolled products do not automatically get known by the same nomenclature in the market since the tariff nomenclature and the market nomenclature are not one and the same. There is also no finding in the said decision as to how the products in question are known in the market. (Flat rolled products infact are listed under separate Tariff Headings 72.08 to 72.12, 72.19 to 72.20 and 72.25 to 72.26 depending on the kind of steel used, hot-rolled or cold-rolled, coated, plated or clad and also based on width and thickness). 10. We, however, feel that that larger questions of law raised by the learned Advocate have to be answered in a more appropriate case. The impugned Show Cause Notices including the one issued by the Commissioner himself are sketchy and do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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