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TMI Blog1990 (11) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... on all other goods, not elsewhere specified manufactured in a factory, rate of duty is 1% ad valorem. He further contended that Sarabhai Common Services is a division of the petitioner-Company - Ambalal Sarabhai Enterprises Limited and is engaged in the activity of running utility services such as supply of steam, power, telephone, guest house, ambulance room, training etc. with the funds of different divisions of the petitioner-Company as well as with the funds of Symbiotics Limited. Arrangement was made for generating steam for utilising it for the petitioner-Company, Suhrid Geigy Limited and Symbiotics Limited. It is, therefore, contended that as per the Notification No. 118/75-Central Excises, dated 30th April, 1975 even if 'steam' is considered to be 'goods' falling under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944 as it is manufactured in a factory and is intended for use in the factory of the same manufacturer, then it is fully exempt from payment of excise duty. 3. It is an admitted fact that Special Civil Application No. 675 of 1976 was filed by Sarabhai Chemicals Limited which was incorporated as Private Limited Company and was subsequently d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y heating the water to boiling point. He held that as a liquid substance becomes a gaseous substance by the aforesaid process, it can be said that a new substance comes into existence, just as in the case of 'ice', which is manufactured by cooling the water to freezing point. 5. Further, after considering the contentions raised by the petitioner he arrived at the conclusion that Sarabhai Common Services is a company/joint venture of four participating units, namely, (1), Sarabhai Chemicals Limited, (2) Symbiotics Limited, (3) Suhrid Geigy Limited and (4) Sarabhai M. Chemicals which is a division of S.M. Chemicals and Electronics Limited. He considered the fact that it is an admitted position by the petitioner that the four contributing units have contributed capital assets in Sarabhai Common Services in different proportions as mentioned in paragraph 4 of the writ petition filed before this Court (Special Civil Application No. 675 of 1976). As Sarabhai Common Services is a joint enterprises, the Exemption Notification No. 118/76 will not be applicable. He held that it cannot be said that Sarabhai Chemicals Limited or any other participating unit is a factory belonging to Sarabhai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Manufacture includes any process incidental or ancillary to the completion of a manufacture product." [S. 2(f)]. We are unable to agree with the learned Counsel that by inserting this definition of the word "manufacture" in S. 2(f) the legislature intended to equate "processing" to "manufacture" and intended to make mere "processing" as distinct from "manufacture" in the sense of bringing into existence of a new substance known to the market, liable to duty. The sole purpose of inserting this definition is to make it clear that at certain places in the Act and word 'manufacture' has been used to mean a process incidental to the manufacture of the article. Thus in the very item under which the excise duty is claimed in these cases, we find the words "in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power." The definition of 'manufacture' as in S. 2(f) puts it beyond any possibility of controversy that if power is used for any of the numerous processes that are required to turn the raw material into a finished article known to the market the clause will be applicable and an argument that power is not used in the whole process of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Schedule to Central Excise Tariff Act. 7. The learned Advocate General, therefore, submitted that "steam" cannot be said to be "goods" subject to excise duty under Entry 68 of the First Schedule as it is not marketable. It is an accepted position that gas is held to be movable property for the purpose of excise duty. If gas is considered as "goods", in our view there is no reason why "steam" which is one form of gas should not be considered as "goods". It is a property which can be weighed. Its pressure can be measured. Further, it cannot be said that the "steam" is not known in the market as "goods". It is known in the market where steam is required for manufacture of numerous goods. Steam is known to the market as a source of power since several years. It is also a known fact that steam is used for manufacturing or processing numerous articles or for operation of other numerous machines. 8. In the Webster's New Twentieth Century Dictionary one of the meanings of "steam" is power, force, energy. The steam power can be used for various purposes including the running of steam-engine, steam-boat, steam-boilers, steam-car, steam-jacket, steam-chimney, steam-cylinder, ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is apparent that the four Companies established one unit for producing steam and marketed it for a limited purpose i.e. for their use or consumption as agreed between them. Hence, there is no substance in the contention that "team" is not a "goods". 12. With regard to the second submission, the learned Advocate General contended that the notification No. 118/75, dated 20th April, 1975 (Annexure "A") would be applicable as "steam" was manufactured in a factory and was intended for use in the factory of the same manufacturer and, therefore, whole of the duty of excise leviable thereon is exempted. In our view, this contention is without any substance. It is an admitted fact that Sarabhai Common Services was producing "steam" and it was distributed to various Companies,. Therefore, it cannot be said that Sarabhai Common Services was manufacturing "steam" for use in its own factory. Admittedly, Symbiotics Limited is a separate Company. Further, at the relevant time, Suhrid Geigy Limited was also a separate Company. It is also stated in the petition that Sarabhai Common Services was part of Sarabhai Chemicals Limited which was a different Company from Sarabhai M. Chemicals and Ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as disputed questions of facts cannot be dealt with or decided in this petition. In the result, there is no substance in the second contention also raised by the learned Advocate General. 14. Lastly, it was contended that the demand raised in the show cause notice Annexure "M", dated 26-7-1980 for the period from 30th April 1975 to 31st March 1980 is time-barred. For this contention, reliance is placed upon the judgment in the case of Gokak Patel Volkart Ltd. v. Collector of Central Excise, Belgaum - 1987 (28) E.L.T. 53 (SC) = AIR 1987 Supreme Court 1161, wherein the Supreme Court considered the following direction given by the Karnataka High Court by its order dated 4-6-1976 in Writ Petition No. 2632 of 1976: "Pending disposal of the aforesaid Writ Petition, it is ordered by this Court that collection of excise duty as a fabric be and the same is hereby stayed. It is further ordered that the petitioner shall, however, continue to pay excise duty as yarn and shall further maintain an account in square metres for future clearance." and held that the High Court had directed stay of collection and had not given any interim direction in the matter of issue of notice of levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following order: "In the light of the aforesaid discussion, the further hearing of this petition is adjourned. The ad-interim order made herein on April 26, and confirmed with some modification on May 7 is further modified and the second respondent is permitted to continue the proceedings pursuant to the impugned show cause notice dated April 14, 1976 (Annexure J). The said respondent will complete such inquiry and in this proceeding the order made by him at the termination of the inquiry within a period of three months from the date of the receipt of the writ. The petitioner will extend the necessary co-operation to the second respondent to enable him to complete the aforesaid inquiry within the time limit." In view of the aforesaid orders of this Court directing the authority not to take any action against the petitioner under the provisions of Central Excises and Salt Act, 1944, it was not open to the authority to issue any show cause notice making the demand for excise duty. If the authority had issued any such show cause notice, it would have been contempt of the Court as it would be in violation of the interim direction. It is unfortunate that inspite of this clear po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who are parties before the Court, interim orders staying the payment of such taxes until final disposal of the matters should not be passed. It is a matter of balance of public convenience. Large amounts of taxes are involved in these types of litigations. Final disposal of matters, unfortunately in the present state of affairs in our Courts, takes enormously long time and non-realisation of taxes for long time creates an upsetting effect on industry and economic life causing great inconvenience to ordinary people. Governments are run on public funds and if large amounts all over the country are held up during the pendency of litigations, it becomes difficult for the governments to run and it becomes oppressive to the people. Governments' expenditures cannot be made on bank guarantees or securities. In that view of the matter as we said before, if we may venture to suggest for consideration by our learned brethren that this Court should refrain from passing any interim orders staying the realisations of indirect taxes or passing such orders which have the effect of non-realisation of indirect taxes. This will be healthy for the economy of the country and for the Courts." In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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