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TMI Blog2007 (9) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... re" as it gave rise to a new product with name, character and use distinctly different from the bare pipes. Accordingly, show cause notice dated 7-3-2006 was issued to the appellants demanding duty of over Rs. 24 crores along with education cess of over Rs. 49 lakhs front the appellants in respect of the coated pipes supplied to M/s. IOCL during the above period. The SCN alleged, inter alia , that the appellants had, with intention to evade payment of duty, wilfully suppressed before the department the fact that they had carried out processes amounting to "manufacture" on the bare pipes sup plied by M/s. IOCL. Thus it invoked the proviso to Section 11A(l) of the Central Excise Act to recover the aforesaid amounts with interest thereon from the party. The notice also proposed penalties on the party under Section 11AC of the Central Excise Act and Rule 25 of the Central Excise Rules, 2002. In their reply to the SCM, the appellants submitted that the bare MS pipes received by them had been classified under Heading 73.06 by the manufacturer thereof; that CENVAT credit of the duty paid on the bare pipes had been availed by them (appellants); that this credit was reversed at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the appellants reiterated the assessee's submissions made in their reply to the SCN. He also cited the following decisions of the Tribunal in support of the assessee's case that the activity of coating MS pipes with coal tar enamel or polyethylene did not attract Chapter Note 5 prior to its amendment made on 18-4-2006 (1) Ashok Silk Mills v. CCE, Mumbai -1999 (107) E.L.T. 771(Tribunal) (2) Nilgiri Herbals Pvt. Ltd. v. CCE, Mumbai - 2001 (132) E.L.T. 781 (Tri. - Mumbai) (3) Associated Pesticides v. CCE, Guntur - 2000 (115) E.L.T. 561 (Tribunal) (4) CCE, Guntur v. Winfield Chemicals India Ltd. - 2002 (140) E.L.T. 477 (Tri.-Chennai) (5) CCE, Jaipur v. Anand Threads -2003 (157) E.L.T. 103 (Tri-Del.) (6) Murarjee Goculdas Spg. Wvg. Co. Ltd. v. CCE, Mumbai - 2004 (172) E.L.T. 35 (Tri.-Mumbai) (7) Indian Oil Corporation Ltd. v. CCE, Mumbai - 2005 (190) E.L.T. 408 (Tri.-Mumbai) Ld. counsel also referred to the Apex Court's judgments in UOI v. DCM Ltd., 1977 (1) E.L.T. (J 199) ES.C.] and UOI v. J.G. Glass Industries Ltd., 1998 (97) E.L.T. 5 (S.C.) as also to certain decisions of the Tribunal, in the context of arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey required to be given a suitable protective coating. Coal tar enamel coating was given where the pipes were intended to be laid in the earth. Polyethylene coating was give where the pipes were to pass through water. These coating activities were undertaken by the appellants as job work for M/s. IOCL and, on the job charges, the appellants paid Service I and these payments accepted by the Department. 6. The impugned demand of duty is on the activity undertaken by the appellants on the bare MS pipes received from M/s. IOCL during period Aug'04 to March'05, The question, therefore, is whether this activity amounted to "manufacture" within the meaning thereof as given under Section 2(r) of the Central Excise Act- By now, it is settled law that no process would qualify to be "manufacture" unless the resultant commodity is different in name, character and use from the original commodity which has undergone the process or unless the process is statutorily deemed to be amounting to "manufacture". In the present ease, the process of coating coal tar enamel/polyethylene was done on MS pipes. In commercial parlance, these pipes were only known as MS pipes, whether bare or coated. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diluting with sol vents and adding chemicals like stabilizing or dispersing agents, inert carriers etc. was held to be amounting to "manufacture" prior to introduction [in 1997] of Note 2 to Chapter 38 of the said Schedule. In the case of Indian Oil Corporation (supra), it was held that repacking of lubricating oil into smaller packs did not amount to "manufacture" till the insertion un 2000] of Note 9 to Chapter 27 of the said Schedule. Thus it is settled law that there is no deemed "manufacture" prior to introduction of 'deeming provision' in the First Schedule to the Central Excise Tariff Act. Therefore, in the present case, prior to 18-4-2006, the process of coating MS pipes of Heading 73.06 with cement or polyethylene or other plastic material did not amount to "manufacture". 7. Ld. SDR has made an endeavour to show that the appellants them selves had classified 'spiral welded pipes' under Heading 73.05 and, therefore, the ERW (electrical resistance welded) pipes received by them from M/s. IOCL during the period of dispute could also be classified under the above heading and, accordingly, the coating of such pipes with coal tar enamel/polyethylene could be held to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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