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TMI Blog2017 (10) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity is done thereon for completion of the activity for further use, it shall amount to manufacture - A similar issue has been examined by this Tribunal in the Jindal Stainless Steelway Limited [2014 (9) TMI 658 - CESTAT MUMBAI] wherein the appellant was engaged in cutting and slitting of coils. In addition to that they have carried out the slitting into desirable width as per the customersrequirement, larger weight coils are cut into smaller weight as per the customers requirement, that the coils are coated and layered with plastic for improving drawability besides applying inter-leaving paper for protection of material so as to be fit for end use application. The said activity was examined by this Tribunal, as defined under Section 2(f) wherein the process incidental or ancillary, was held to amounts to manufacture. Admittedly, in this case, M/s. GM is engaged in the activity of removing impurities from unrefined lead ingots for making lead alloy and thereafter alloy ingots. The refined lead has been recognised in Chapter 78 of Central Excise Tariff Act, 1985 - it is clear that refined lead means the metal weight at least 99.9% of lead and with some other antimony, as prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at credit to M/s. GM. Accordingly, the appeal filed by the Revenue is dismissed. Whether M/s. GMI is entitled for the benefit of exemption Notification No. 214/86-CE or not? - Held that: - in terms of Notification No. 214/86, the principal manufacturer has to file an undertaking before the jurisdictional Central Excise authority of job works that the principal manufacturer shall pay the duty on the manufactured goods. Admittedly, the said undertaking has been filed by M/s. GM before the authorities below. In that circumstance, there is no fault of the appellant and the benefit of Notification No. 214/86 cannot be denied. Appeal dismissed - decided against Revenue. - Appeal No. E/51871/2015, Appeal No. E/51089,52408/2015 - Final Order No. 62014-62016/2017 - Dated:- 17-10-2017 - Hon ble Mr. Ashok Jindal, Member (Judicial) And Hon ble Mr. Devender Singh, Member (Judicial) Shri A.R. Madhav Rao and Shri R.K. Hasija, Advocates for the Appellant and vice versa Shri Atul Handa, A.R. for the Respondent and vice versa ORDER Per : Ashok Jindal M/s. Gravaita Metal (hereinafter referred to as GM for short) and M/s. Gravita Metals Inc. (hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dication, demand was confirmed. Aggrieved from the said order, M/s. GMI is also in appeal. 5. As the issue is inter-connected, whether the activity undertaken by M/s. GM amounts to manufacture and M/s. GMI is not liable to pay duty. Therefore, all the appeals are taken-up together for disposal by this common order. 6. Ld. Counsel for the appellants-assessee submits that in the case of M/s. GM and in the case of other manufacturers, the same process was adopted by the other manufacturers as well as M/s. GM and report on that effect was called by this Tribunal from the ld. AR and the report shows that duty is being collected on the process of M/s. GM, the appellant herein on the same process held to be manufacture. He relied on the report in the case of Chloride Metals, Pune, a 100% subsidiary of Excide Industries Limited, duty is being collected on the identical process. This is of relevance in as much as the Tribunal in the case of Exide Industries - 2003 (154) ELT 110 has held that, making lead alloy ingots from refined lead, does not amount to manufacture and this decision has been relied upon by the Commissioner in the impugned order. Therefore, it is his submission that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h requires a purity of 99.96%. The literature shows that the industry for making batteries in United States collapsed as compared to their counterpart factories in Europe, in the case of Valve regulated lead acid batteries, as primary lead was not used but secondary lead was used. In fact, Exide Industries itself suffered in the United States due to the use of lead in the batteries which were not of exacting specifications. Hence, the purity of the lead is very essential for the life of the batteries and there can be no compromise on this issue. The opinion of the Lead and Zinc Development Association submitted to the Commissioner by M/s. GM specifically confirms the requirement of lead of the highest purity to make the lead acid batteries. Against all this, the Commissioner has relied on the evidence of one Mr. Sunil Bhat, who is not aware of the melting point of lead and its atomic number/ weight. He was not aware of IS specifications of Lead for battery though he claimed to have 14-15 years of experience in battery manufacturing. In any case cross examination shows that, if the requisite purity of lead is not used, the life of the battery is at risk. Hence the lead of exact spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them of precise composition amounted to manufacture. He also relied upon the decision in the case of Kores India vs. CCE, Chennai 2004 (174) ELT 7 (SC), wherein the Hon ble Apex Court held that making of typewriter ribbons from jumbo rolls amounts to manufacture. Ld. Counsel submitted that M/s. GM is following the same process of making refined lead ingots and alloy ingots, as followed in the case of making ingots for the first time namely, by melting lead and casting the same. Therefore, it is his submission that, where the process of making is the same, as making of the original product then it amounts to manufacture, as held in the case of CCE, Ahmedabad vs. Tudor (I) Limited 2006 (197) ELT 53 (Tri. Mumbai) and Teumseh Products India Limited vs. CCE, Hyderabad 2004 (167) ELT 498 (SC). He also relied upon the decision of the Hon ble Apex Court in the case of Mahavir Aluminium Limited - 2007 (212) E.L.T. 3 (S.C.) wherein it is held that making billets by melting and casting the ingots amounts to manufacture, as it is a commercially different product. 9. He further submitted that the Revenue, in the case of Shyam Oil Cakes - 2004 (174) E.L.T. 145 (S.C.), proceeded on the basis t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Commissioner is incorrect, unjust, arbitrary to treat the process as not amounting to manufacture whereas in the case of the appellants factory at Gandhidham in Gujarat, duty is being collected right from 2004 onwards and even continues today on the same activities, apart from number of other units all over India who are paying excise duty on the same activities. He submits that the registration certificate has been granted to M/s. GM, treating them as manufacturers and this position has not undergone any change at the hands of the Department. It is further submitted that the Notification No. 56/2002-CE itself lays down a procedure as per paragraph 2C(e) thereof wherein, if the self-credit taken is wrong then within 15 days of the next month, the jurisdictional officer has to direct the reversal of the credit. In case the assessee fails to do so then the same becomes recoverable as erroneous refund. The provisions of clause 2C (e) are mandatory since shallhas been used and thereafter, such an erroneous refund can be recovered under clause 2C (g). Therefore, once it is established that there is an erroneous refund after the determination, within 15 days of the succeeding month, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the ld. AR has relied upon the provisions of Section 5B of the Act that, where the process does not amount to manufacture, the credit taken could be legalised only if a notification is issued by the Central Board of Excise and Customs, in regard to the particular situation is also not well founded. It is clear that the provisions of section 5B can only be applied in case where there is no refund of duty paid by the assessee on the final product is granted to the assessee and was also not claimed by way of refund by the assessee. The appellants are working under the provisions of notification 56/2002-CE, as per the provisions of the notification, are getting the refunds. Hence, their case cannot fall under section 5B of the Act. Moreover, even after considering the provisions of section 5B and Circular No. 911/1/20 10-CX., dated 14.01.2010, relied upon by ld. AR, Tribunal in the case of Asian Colour Coated Ispat Limited vs. Commissioner of Central Excise, Delhi 2015 (317) E.L.T. 538 (Tn. - Del.) has held that where there are additional facts to distinguish from an earlier judgment holding no manufacture, section 5B cannot be invoked. Further, following the earlier judgments especi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose being supplied on job work basis, and cleared from the factory of the appellants, have been extended the benefit of the Notification No.56/2002-CE. The non-following of the procedure was due to availment of benefit of Notification No. 214/86-CE, wherein all formal procedures have been followed by M/s. GMI. In that circumstances, as held by the Hon ble Apex Court in the case of Formica India Division vs. Collector of Central Excise - 1995 (77) ELT 511 (SC), non-following of procedures was an impossibility at the relevant time due to availing of the other Notification 214/86-CE and hence, the benefit of Notification No. 56/2002-CE should now be extended. He also submitted that the Commissioner has also confirmed the demand on dross, waste etc. of lead relying on the Larger Bench decision of the Tribunal in the case of Hindalco Industries Limited - 2014 (308) ELT 472 (Tri. LB). However, this decision stands overruled by the Hon ble High Court of Bombay in the case of Hindalco Industries Limited - 2015 (315) ELT 10 (Bom.). He therefore submits that demand on this count also liable to be set aside. 12. On the other hand, ld. AR for the Revenue reiterates the findings of impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture or not. (b) While holding that the activity undertaken by M/s. GM does not amount to manufacture; and the activity undertaken by a unit of M/s. GM situated in Gandhidham (Gujarat) and other similarly placed manufacturers, have been held to amount to manufacture, is in violation of Article 14 of the Constitution of India, or not. (c) Whether the appellant has been treated as manufacturer or not, in terms of exemption notification under Customs Notification No. 96/2009-Cus. (d) Whether the ld. Adjudicating authority is right to drop the demand on account of Cenvat credit utilised for payment of duty or not. (e) Whether M/s. GMI is entitled for the benefit of exemption Notification No. 214/86-CE or not. (f) Whether benefit of Notification No. 56/2002-CE can be granted to M/s. GMI, if the benefit of Notification No. 214/86-CE is held to be not entitled to them. 15. We find that the basic issue on merit is that whether the activity undertaken by M/s. GM is amounts to manufacture or not. 15.1 To decide whether the activity amounts to manufacture or not, first we need to see the expression manufacture as defined under Section 2(f) of the Act, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of application is resulting in a new and commercially distinct article known to the market as such is emerging at the end then it would amount to manufacture, otherwise not. Further, in the case of Gujarat Steel Tubes Limited (supra), the Hon ble Apex Court held that galvanisation does not bring into a new commodity into existence therefore, the said activity does not amount to manufacture. Further, in the case of Technoweld Industries (supra), again the Hon ble Apex Court held that the process of drawing wires from wire rods not amounts to manufacture as both products being wires-product not to be considered excisable merely because wires and wire rods. Further, in the case of Premji Haridas Co. (supra), the said decision is in respect of Octroi Refunds under Rule 3A of Bombay Municipal Corporation Octroi Refund Rules, 1965 and the issue was conversion of Castor Oil (Commercial) into Castor Oil (BP) by a process of filtration and in the said case, the expression manufacturehas not been considered as per Section 2(f) of Central Excise Act, 1944. Therefore, the same is not relevant to the facts of this case. In the said case, this Tribunal relied upon the Hon ble Apex Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is practically no difference between the character of the original ingots and the processed ingots. Admittedly, the original lead ingots may have undergone a minor change with respect to the purity percentage of the metal contained, however, the original character of the goods would not be lost and minor change in chemical composition would not amount to manufacture of a distinct commodity as specifically held in the case of Hindustan Cables and Exide Industries (supra). 15.3 We observed that expression manufacture under Section 2(f) was initially not correctly interpreted as per CBEC letter F.No. 4/3/2006 dated 16.06.2006 wherein it has been clarified that a number of departmental and private publications of Central Excise Act, 1944, published from time to time after 1986, contain(ed) an extra word andat the end of Section 2(f)(i) and before Section 2(f) (ii). The Section 2(f) reads as - manufacture includes any process, Incidental or ancillary to the completion of a manufactured product, which means that if the goods have been manufactured and any activity is done thereon for completion of the activity for further use, it shall amount to manufacture. A similar issue has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the extent of 99.9% of lead. The Chapter 78 of CETA, itself recognise a separate new product of 99.9% of refined lead. Further, process of making refined lead from unrefined lead shows that when unrefined lead is obtained, it has impurity ranging from 79.34% to 95.64% and in other test report, it is ranging from 97.84% to 99.42%. The process of making refined lead ingots are after going to ground zero, namely the metal is totally melted and thereafter to remove impurities, chemically the same is treated and the purity of the lead obtained to the highest degree i.e. 99.9% of lead as per sub heading note of Chapter 78 which limiting the content by weight and percentagewise of various other elements like silver, arsenic etc. The refined lead so made by M/s. GM is commercially recognised as separate identifiable product and the said refined lead is again melted to make it alloy lead ingots. That, each manufacturer of batteries has its own specifications of the refined lead and lead alloy ingots, and these are made to very exact specifications, including the use of spectrometric analysis. The case of M/s. GM is different from the case of Exide Industries (supra) where from the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for it will suit the manufacturer to retain and stamp the same name to the end product also. The `character or usetest has been given due importance by pronouncements of the Supreme Court. When adopting a particular process, if a transformation takes place, which makes the product have a character and use of its own, which it did not bear earlier, then the process would amount to manufacture within the meaning of Section 2(f) irrespective of the fact whether there has been a single process or have been several processes. 2. The learned Single Judge from whose judgment the Division Bench was considering the appeal had pointed out that brake lining blanks could not be used by owners of motor vehicles without holes and trimming and chamfering. The learned Single Judge also pointed out that it was only after this process which the blank brake linings underwent that they could be used by automobile manufacturers in the manufacture of their vehicles. We are of the opinion that both the learned Single Judge as well as the Division Bench applied the correct test and we see no reason to interfere therewith. The appeals are, therefore, dismissed with no order as to costs. 17. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new commercially identifiable commodity which has a different name, different character and different use. The process of transformation is not merely processing to improve quality or superficial attributes of the raw cotton. The cotton looses its original form and it marketed as a commercially different and distinct product. This aspect of the matter is rightly noticed by the High Court by relying upon the decision of this Court in Empire Industries case (supra) wherein this Court has explained the meaning of the expression 'manufacture as when the result of the treatment, labour and manipulation a new commercial commodity has emerged which has a distinctive new character and use. Admittedly, in this case, the refined lead is known with a separate name having characteristic of 99.9% of purity and having a different use by a particular Section of battery manufacturers. In that circumstances, M/s. GM has passed the test of Manufacture and in the light of the decision in the case of Delhi Cloth and General Mills Co. Limited (supra) the product which is known with different nomenclature and character and use is known to a manufactured item. Therefore, the activity undertaken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty undertaken amounts to manufacture or not and the Hon ble Apex Court held that a when a different product comes into existence as a result of a process which makes the said product commercially usable leads to manufacture. In this case also, as the goods are transformed which are different after a particular process, therefore, it is held that manufacture of goods has taken place. 19. As regards the point (b), whether there is a violation of Article 14 of the Constitution of India, or not. We find that ld. Counsel for the appellant, during the course of arguments submits that similar activity undertaken by other manufacturers in all over India, in all the cases, the activity held to amount to manufacture. We also note that in the case of appellants own unit, situated in Gandhidham, Gujarat, a report was called for from the department, the same is produced by the ld. AR before us, wherein the activity treated to be as manufacture. The report is reproduced as under:- (a) Extract from the letter from Jammu Commissionerate dated 07.10.2016 Sr. No. Name of the party (M/s.) Sr. No. in the list provided by your office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 falls under the Range-III of Dankuni Division of Central Excise. We find that in all the above mentioned cases, in all over the country, the activity undertaken identical to M/s. GM is held to be a process of manufacturing and all the units are paying duty. Therefore, the observation that process undertaken by other units, held to be a process amounts to manufacture, whereas the same process undertaken by M/s. GM does not amounts to manufacture, is not sustainable in the light of the decision of the Hon'ble Supreme Court in the case of Damodar J. Malapani (supra), held as under in the similar set of facts:- The appellants before us have impugned the decision of the Tribunal by which the Tribunal upheld the decision of the Excise Authorities to classify the product manufactured by the appellant under Tariff Heading 24.04 viz., Manufactured tobacco. According to the appellant the product was properly classifiable under Heading 24.01 i.e. Unmanufactured tobacco. 2. It is not in dispute that the appellants product is chewing tobacco. It is also not in dispute that chewing tobacco is not necessarily manufactured tobacco or classifiable under Tariff Heading 24.04. The cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove observations, and it is for the competent Central Excise Officers to come to correct decisions in consonance with the principles of uniformity, equity and justice. 4. It is difficult to understand the reasoning of the Tribunal. The least that the Tribunal could have done in the interest of uniformity was to call upon the Revenue Authorities to explain why they were making a distinction between the appellants product and that of M/s. Chandulal K. Patel without subjecting the appellantsproduct to any chemical analysis. 5. In their appeal from the decision of the Tribunal before us the appellants have again raised the issue that the Tribunal should have considered the fact that the appellants and Chandulal K. Patel Cos products were identical and were the outcome of an identical process, and that since the latter had been exempted from paying any central excise duty on the ground that their product was classifiable under Tariff Heading 24.04, the appellants should get the same benefit. 6. At the hearing today we sought an explanation from the learned Counsel appearing on behalf of the Revenue Authorities as to why different stands had been taken in the cases of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 4. This Court in an identical situation arising in the case of Damodar J. Malpani v. Collector of Central Excise reported in 2002 (146) E.L.T. 483 (S.C.) held that the least the Tribunal could have done in the interest of uniformitywas to call upon the Revenue Authorities to explain why they were making a distinction between the appellants product and that of another manufacturer allegedly manufacturing the same product. This court, in these circumstances, remanded the case to the tribunal for considering whether the product and process followed by the other manufacturer in the said case was the same as that of the appellants in the said case and thereafter consider the question of classification of the product manufactured by the appellant therein vis-`-vis the product manufactured by the other manufacturer. 5. In view of the decision of this Court in the case of Damodar J. Malpani (supra), we deem it fit to set aside the impugned order of the Tribunal and remand a the matter back to the Commissioner (Appeals) for considering whether the process being followed by the manufactures, viz., M/s. Anand Engineering Works and M/s. Santha Raghu Industrial Products, Coimbator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. Therefore, we hold that the process undertaken by M/s. GM amounts to manufacture in terms of exemption notification under Customs Notification No. 96/2009-Cus. 22. As regards the issue (d) whether the ld. Adjudicating Authority is right to drop the demand on account of Cenvat credit utilised for payment of duty or not. We find that M/s. GM has utilised Cenvat credit of inputs for payment of duty on their final product. The case of the Revenue is that as the goods manufactured by M/s. GM are exempted from payment of duty therefore, they are not entitled for Cenvat credit. We find that a similar issue came up before the Hon'ble High Court of Bombay in the case of Ajinkya Enterprises (supra) wherein the Hon'ble High Court has held that in case of activity does not amount to manufacture, the payment of duty shall amount of reversal of Cenvat credit. Therefore, the ld. Commissioner has rightly allowed the claim of Cenvat credit to M/s. GM. Accordingly, the appeal filed by the Revenue is dismissed. 23. As regards the issue framed as point (e) - Whether M/s. GMI is entitled for the benefit of exemption Notification No. 214/86-CE or not. We find that, in terms of Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puty Commissioner of Central Excise having jurisdiction over the appellantsfactory to the effect that the goods would be removed (by the raw material-supplier) on payment of duty for home consumption. The demand of duty is consequential to non-fulfillment of this condition. The appellants have resisted the demand of duty on the ground that it was for the raw material-supplier to comply with the said condition. It is their further case that the department could have recovered duty on the subject goods from M/s. Vijay Detergent Products (P) Ltd. on the ground of non-fulfillment of the said condition. We find that the Tribunals decision in Aggarwal Rolling Mills (supra) supports this case of the appellants. No binding decision to the contrary was cited by the DR. In view of the above observations, we hold that M/s. GMI is entitled to avail the benefit of Notification No. 214/86 (ibid) and therefore, we are not going to the issue of whether M/s. GMI is entitled for exemption Notification No. 56/2002 (ibid) or not. 24. In view of the above observations, we pass the following order:- (i) The activity undertaken by M/s. GM amounts to manufacture. Therefore, the impugned order q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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