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TMI Blog1984 (6) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... falling under the same sub-tariff item i.e., 27(b). It appears that before 1970, in such a situation no excise duty was collected at the stage of manufacture of Circles and at that time duty was not ad valorem but was specific i.e., on weight basis. Central Excise duty on this item was partly advaloremised in 1970. The appellants were not paying duty at the stage of Circles but were paying duty at the final product stage that is aluminium utensils. They were also not following the procedure laid down under Rule 56A of the Central Excise Rules, 1944 (hereinafter called Rules). The appellants claim that for doing so they were relying on a clarification given by the Collector of Central Excise, Bombay vide his communication dated 5-4-1961, addressed to the appellants subsidiary concern M/s. Metal Rolling Works Private Ltd. The said communication related to Copper Sheets and Circles. It was clarified that manufacturers, who are only making Circles out of duty paid sheets would not be required to pay duty again on Circles cut out from such duty paid sheets. Sometimes in 1976, the Excise authorities on verification found that the appellants had manufactured and cleared Hindalium and Alu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and no duty is attracted. He submitted that to subject such goods to duty under T.I. 27(b) again would tantamount to double taxation , which is not at all warranted. In support of his argument, Sh. Srikantia, learned Consultant relied on the following decisions : (i) Maharashtra Safety Glass Works Pvt. Ltd. v. Union of India - 1982 E.L.T. 23 (Bombay). (ii) Empire Dyeing and Mfg. Co. Ltd. v. Bhide and Ors - 1977 E.L.T. J 34. (iii) Hindustan Steel Ltd.: Bhilai Steel Plant v. Union of India - Compilation of Judgments in Central Excise Cases 1975 (MP)=1979 E.L.T. (J-33). (iv) Union of India Ors. v Tata Iron Steel Co. Ltd., Jamshedpur - E.C.R. C-490 (S.C.) = 1977 E.L.T. (J-61). (v) Aluminium Corporation of India Ltd. v. Union of India Ors. - E.C.R.C. 466 (S.C.) = 1978 E.L.T. (J452). (vi) Shakti Insulated Wires Private Ltd. v. Union of India - 1982 E.L.T. 10 (Bombay). (vii) Government of India v. Eastern Dyeing Co., Ludhiana - 1982 E.L.T. 764 (G.O.I.). (viii) Kores (India) Ltd. -1982 E.L.T. 480A (G.O.I.). (ix) Golden Paper Udyog (P) Ltd. Faridabad v. Collector of Central Excise Delhi - CEGAT O. No. 109/1983-C, dated 25-5-1983, [1983 E.L.T. 1123 (CEGAT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Circles, after having taken account of the fact that billets were already subjected to excise duty, it is obvious that the process, by which the billets were converted into Circles, was held by the legislature to amount to manufacture. It is true that the decision on facts is slightly different from the present case; whereas, in the above case circles were made from the duty paid billets and duty on billets was lesser compared to duty on circles but that would not affect the ratio of the decision. It is not disputed that the sheets were liable to duty and from these sheets circles were made in respect of which the word manufacture is used. Applying the ratio of the decision, there can be no doubt that conversion of duty paid sheets into circles would constitute manufacture and such circles would be dutiable unless there was any exemption or set-off of duty to that effect. 6. As for Sh. Srikantia, learned Consultant s strong reliance on Bombay High Court decision in Empire Dyeing Mfg. Co. Ltd. v. Bhide and Ors. - 1977 E.L.T. (J34) (Bombay) Vijay Textile v. Union of India - 1979 E.L.T. (J181) and Golden Paper Udyog (decision of CEGAT) supra and the argument that du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand of duty made on Circles. The appellants have also been from 1977 onwards following Rule 56A procedure and claiming credit of duty paid on sheets. For all these reasons, we hold that circles made from duty paid sheets constituted manufacture and were liable to payment of duty unless there was an exemption to that effect or procedure for claiming proforma credit of duty paid and followed. 7. Sh. Srikantia, learned Consultant forcefully invited our attention to orders passed by the Central Board of Excise Customs and argued that the Board had observed that exercise of charging duty on Circles cut out from duty paid sheets, the circles having less weight then sheets would be administratively wasteful and even of doubtful legal validity. The legal validity of demand of duty on Circles has been dealt with by us above. This ground therefore, does not help the appellants. 8. Sh. Srikantia also argued that weight of sheets would be more than the weight of the circles made out of it. Duty thus on sheets would be more than duty on circles. Therefore, there was no intention to collect duty at every stage because in these circumstances, there could not be set-off. We are afraid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Customs in its order-in-revision had expressed that the appellants could be given the benefit of Rule 56A and allowed set-off of duty retrospectively in view of the amendment in Rule 56A in 1981. This should be taken to be a mandate from the Board to the Collector of Central Excise to give benefit of this provision. 14. We have gone through the orders of the Board, passed by Sh. J. Datta, Member as also of the Collector, Bombay. From a reading of order of the Board, we do not find any such mandate which Sh. Srikantia claimed in favour of the appellants. The learned Collector has discussed this aspect of the matter at page 7 of his order. He has held that none of the conditions under proviso to Rule 56A (2B) were satisfied in the appellants case. The said proviso to Rule 56A (2B) consists of four conditions. Sh. Srikantia claimed that the appellants fulfilled conditions number (b), (c) and (d) but he admitted that the appellants did not fulfil condition (a) (i) . (ii) relating to late communication of such notification or (ii) change in assessment of raw material or component parts of finished goods from a particular Item No. in the First Schedule to the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sides i.e., the appellants and the department. The Department itself was not insisting on manufacturers of circles from duty paid sheets to pay duty again at circle stage. This could be a mistaken interpretation of a provision. In such a situation, the provision and limitation applicable should be Rule 10 read with Rule 173-J, as then existing as the appellants were following Self Removal Procedure. The limitation under the two Rules read together at the material time was one year. The demand raised against the appellants should, therefore, be limited to period from the date of show cause notice dated 24-11-1976 i.e., it would be limited to the period 25-11-1975. In taking this view, we find support from a decision of Madras. High Court in Modern Theatre Ltd., Salem v. Collector of Central Excise, Madras published at page-234 Compilation of judgment in Central Excise cases (1962-66) Volume-I compiled by the Directorate of Inspection, Customs Central Excise, New Delhi. 21. Sh. Srikantia, learned Consultant also urged that duty had not been worked out by the Department and Collector had mechanically accepted the hypothetical figures given by the appellants during the hearing b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re manufactured in an L. 4 licensed premises and utilised therein for manufacture of another category of goods, duty is leviable on such clearances . The obvious implication is that circles were manufactured for moulding into utensils and derive duty liability from this fact, irrespective of duty having been first paid on the Aluminium sheets used. 26. Tariff Item 27, as relevant for this appeal, covers: (a) (i) Aluminium in any crude form (including ingots, bars, blocks, slabs, billets, shots and pellets); (ii) wire bars, wire rods and castings not otherwise specified; (aa) waste and scraps. (b) Manufactures, the following namely, plates, sheets, circles, strips, shapes and sections, any form or size, not otherwise specified. (c) Foils, etc. This appeal concerns sub-item (b), to wit, manufactures. 27. Notification 43/75 dated 1-3-1975 Sl. No. 8, shows that circles can be manufactured from duty paid circles, plates, sheets or strips of Aluminium and are exempted. There can also be no doubt that all the manufactures specified in sub-Item (b) of item 27 are, individually, manufactured products and are liable to central excise duty, by whichever process they are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since they belonged to the same genus and were intentionally grouped under a common sub-item. The practice is in fact in keeping with the intention of the legislature not to tax sheets, circles etc. in every form or size but in any form or size . If the departmental interpretation (about which the Board has doubts regarding legal validity) is to be accepted, it is tantamount to substituting the word every for any appearing in Item 27(b) and for this there is no warrant, as it makes a word of difference to the meaning. It could be argued, to meet this point, that in any form or size qualifies only shapes and sections and not the other articles mentioned, but this would not be to correctly construe sub-item (b) on a comparison with Items 26A(2) and 26B(2). Besides, the Hon ble Supreme Court (1978 E.L.T. J 38 Ramlal Mansukhrai) held that in any form or size in the case of copper circles covered ultrimmed circles and the matter rests with this decision. 31. Further, it is seen that there are exemptions, like Notification No. 292/77, which applies to shapes and sections, falling under sub-item (b), if manufactured from circles, plates, sheets or strips falling under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheets, circles etc. into thinner forms or made into circles converted from duty paid plates, sheets, circles etc. of copper, must also be applied to circles of aluminium cut from duty paid sheets, if arbitrariness is to be avoided; and the department has not shown how the two are different, except for the ad valorem argument, which has been dealt with earlier. 36. Incidentally, the appellant has also challenged the factual accuracy of the statement in the impugned order that the said clarification was only for conversion of duty paid plates etc. into thinner forms. Apart from this, it would make no difference if it was cutting into a circle or rolling into a thinner gauge, for both processes would or would not constitute manufacture , as discussed in para 4.5. 37. The appellants are fortified in this regard by their assertion that it is only they who have been singled out by the department for this recovery of duty, which remains uncontroverted by the department. If taxing authorities ignore their precedents (in this case a practice not to recover duty on such circles) it will not only lead to utter confusion but will result in the most unfair discrimination of taxes in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Benches of the Tribunal, are adverted to. They deal with Item 17, Paper and Board, all sorts, and lay down the ratio that double taxation under the same sub-item (2) is not permissible; and that a second levy was not warranted on conversion of duty-paid Kraft paper into water-proofed paper by bonding with bitumen. This, in essence, is the conclusion arrived at by me with regard to Item 27(b), even though it is similar but not fully analogous to Item 17(2). In 1983 E.L.T. 1123, para 9(x), it has been held that where it is clear that it was not the legislative intent to levy duty twice, the mere fact of an exemption specifying a product cannot be constructed to imply a levy in terms of Item 17(2) . It adds that where, in fact there is no levy, an exemption from a levy is meaningless and, further, nor can a levy be inferred from an exemption from such levy when in fact there was none . The caveat entered in para 4.13 justifies the issue of an exemption to enable the department to protect the revenue, as also brought out in para 4.6. 41. The learned SDR relied on (i) Order No. C.95/84 of February 1984 by Special Bench C (Uma Laminated Products); (ii) 1978 E.L.T. 389 (Ramlal Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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