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TMI Blog2001 (2) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and corrugation on the said sheets. In 1998, it applied for registration under the Act. The competent authority issued registration certificate on 29-4-1998. On that very day, the petitioner's representative submitted letter to respondent No. 5 for withdrawal of the registration by contending that in view of the law laid down by the Supreme Court in M/s. Gujarat Steels Tubes Ltd. v. State of Kerala, 1989 (42) E.L.T. 513 and by the Gujarat High Court in M/s. Zaverchand Gaekwad (P) Ltd. v. Union of India, 1992 (61) E.L.T. 225 and circular No. 19/94/94-C.E., dated 9-2-1994 issued by the Central Board of Excise and Customs, New Delhi (for short, the Board), galvanisation of steel strips does not amount to manufacture within the meaning of Section 2(f) and, therefore, no duty is payable by it. No order appears to have been passed by the concerned authority on that application, but after about 2 years, a team of the officers of Central Excise Department visited the factory of the petitioner and detained 142.260 MT of galvanised corrugated sheets on the ground of violation of Rules 9(1), 33, 173, 174 and 226 of the Rules. The same were handed over to Shri Ram Murti Mukhriya, General M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof is higher than the plain metallic sheets or galvanised metallic sheets. They have further averred that the galvanised plain sheets are commonly used in the manufacture of desert coolers, boxes, trunks etc., whereas the galvanised corrugated sheets are used in roofing, shelter etc. and their classification under the Central Excise Act, 1944 is also different. The respondents have also sought dismissal of the writ petition as pre-mature by asserting that final order has not been passed in pursuance of the show cause notice Annexure R. 1, dated 22-11-2000 issued by the Deputy Commissioner, Central Excise, Chandigarh. 5.The petitioner has filed replication reiterating its plea that the process of corrugation does not amount to manufacture within the meaning of Section 2(f) of the Act. It has also controverted the assertion of the respondents about the price difference between the galvanised sheets and corrugated galvanised sheets by stating that the price shown in invoice No. 152, dated 1-3-2000 (Rs. 20,200/- per MT) relates to defective galvanised sheets which were sold at rate less than normal price of the galvanised sheets. According to it, the difference between the pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be dismissed as premature because no final order has been passed by the competent authority in pursuance of the show cause notice dated 21-11-2000. 8.Before adverting to the main issue, we consider it appropriate to mention that the respondents have not challenged the petitioner's assertion that in view of the circular dated 9-2.1994 issued by the Board, galvanisation of metallic sheets does not amount to manufacture and, therefore, galvanised metallic sheets cannot be subjected to excise duty. In our opinion, even if the respondents had controverted this plea of the petitioner, we would have granted relief of it in accordance with the Board's circular because it is a settled proposition of law that the circular issued by the Board are binding on the departmental authorities - Ranadey Micronutrients v. Collector of Central Excise (supra) and Steel Authority of India Ltd. v. Collector of Customs, Bombay (supra). 9.The stage is now set for consideration of the main question as to whether the process of corrugation of metallic sheets amounts to manufacture within the meaning of Section 2(f) of the Act. The said section reads as under : "Section 2(f) - "manufacture" includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct. The rolling of a billet into a circle is certainly a process in the course of completion of the manufactured product, viz., circles. In the present case, as we have already indicated earlier, the product, that is sought to be subjected to duty, is a circle within the meaning of that word used in item 26A(2). In the other two cases which came before this Court, the articles mentioned in the relevant items of the First Schedule were never held to have come into existence, so that the completed product, which was liable to excise duty under the First Schedule, was never produced by any process. In the case before us, circles in any form are envisaged as the completed product produced by manufacture which are subjected to excise duty. The process of conversion of billets into circles was described by the Legislature itself as manufacture of circles." 14.The Empire Industries Ltd. v. Union of India and others, 1985 (20) E.L.T. 179 (S.C.) = (1985) 3 SCC 314, a three Judges Bench of the Supreme Court considered as to whether the activities of dyeing, printing and finishing of cotton fabrics and man-made fabrics amount to manufacture within the meaning of Section 2(f) of the Act. Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess. There might be borderline cases where either conclusion with equal justification be reached. Insistence on any sharp or intrinsic distinction between 'processing' and 'manufacture', results in an over simplification of both and tends to blur their interdependence in cases such as the present one." 16.In Collector of Central Excise v. Rajasthan State Chemical Works, 1991 (55) E.L.T. 444, a three Judges Bench of the Supreme Court examined the same issue in the context of claim for exemption claimed by the respondent from payment of duty in respect of the raw material used for manufacture of crude sodium sulphate. Their Lordships referred to the definitions of the words 'manufacture' and 'process' and held as under : "Clause 2(f) gives an inclusive definition of the term 'manufacture'. According to the dictionary, the term 'manufacture' means a process, which results in an alteration or change in the goods which are subjected to the process of manufacturing leading to the production of a commercially new article. In determining what constitutes 'manufacture' no hard and fast rule can be applied and each case must be decided on its own facts having regard to the context in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the respondent before the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi, the Technical Member accepted the plea of the respondent but the Judicial Member took a contrary view. The matter was then referred to the third Member who, without dealing with the issue discussed by the two Members, upheld the contention of the respondent. The Supreme Court reversed the order of the majority of the Tribunal and remanded the case for fresh adjudication. Their Lordships referred to the decisions in Union of India v. Delhi Cloth and General Mills (supra), Empire Industries Ltd. v. Union of India (supra), M/s. Ujagar Prints v. Union of India (supra) and proceeded to lay down the following proposition : "The decisions aforesaid make it clear that the definition of the expression 'manufacture' under Section 2(f) of the Act is not confined to the natural meaning of the expression 'manufacture' but is an expansive definition. Certain processes, which may not have otherwise amounted to manufacture, are also brought within the purview of and placed within the ambit of the said definition by the Parliament. Not only processes which are incidental and ancillary to the comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f activity that it did in the past. Can we, therefore, say that evry material on which printing work is done becomes a product of the Printing Industry? The answer has to be in the negative. An ordinary carton without any printing on it is a completed product and undisputable the product of the Packaging Industry. The question for our consideration is, does it cease to be the product of Packaging Industry as and when some printing is done on the said carton? We are of the view that to a common man in the trade and in common parlance a carton remains a carton whether it is a plain carton or a printed carton. The extreme contention that all products, on which some printing is done, are the products of the Printing Industry cannot be accepted…… What is exempt under the Notification is the product of the 'Printing Industry'. The 'product' in this case is the carton. The Printing Industry by itself cannot bring the carton into existence. Any amount of fancy printing on a card-board would not make it a carton. In the process of manufacturing the printed cartons, the card-board has to be cut, printed, creased and given the shape of a carton by using paste or gum. Simply because there ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, and each case will have to be decided on its own facts but, broadly speaking, the particular activity or process would amount to manufacture if new and different goods emerge having distinctive name, use and character by applying such activity or process; (iii) the moment there is a transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes, the manufacture takes place; (iv) where the change or series of changes brought about by the application of process take the commodity to the point where commercially it can no longer be regarded as the original commodity but is, instead, recognised as a new and distinct article that has emerged as a result of the process; (v) whenever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity but it is only when the change or a series of changes take the commodity to the point where commercially it can no longer be regarded as the original commodity and is recognised as a new an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugated iron' is really steel. The corrugating process enables much lighter gauges of sheets to be used because it makes them very rigid and portable. Galvanizing and Corrugating. - The black sheets are first put through the pickling process. This is done in a stone or timber tank which is filled either with sulphuric or hydrochloric acid to remove all scale, oxide or rust. This operation can be carried out either by hand pokers or by an automatic pickling machine. After being cleansed in a water tank, the flat sheets are then fed into the galvanizing bath either by hand or by an automatic feeder, one at a time. The galvanizing bath is made of steel plates from 1 in. to 1-1/2 in. thick and of a size to suit the width of sheets to be treated. Inside the bath there is the galvanizing machine with rollers which revolve in the molten spelter or zinc which is heated to 850 F. The sheets pass rapidly through the zinc and emerge at the other side of the bath through two exist rollers; these rollers, together with the speed of the machine and temperature of the bath, regulate the quantity of zinc covering, viz. from 1-1/4 to 2-1/2 Oz. per square foot. A flux is used in the process made fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctionary meanings and the description of the process of corrugation it becomes clear that corrugation of plain sheets and galvanised sheets brings into existence a new product having an altogether different identity and use. In their written statement, the respondents have also averred that the process of corrugation of metallic sheets leads to the creation of a product which has different commercial identity/name, marketability and use and the cost of the new product is higher than the original one, i.e. metallic sheets/galvanised sheets. The petitioner has controverted the assertion of the respondents about the price of G.C. sheets but no evidence has been placed on record to prove that the price of galvanised metallic sheets/plain sheets is the same as that of G.C. sheets. Therefore, by applying proposition Nos. (ii), (iii), (iv) and (v) to the facts of this case, we hold that the process of corrugation undertaken by the petitioner amounts to 'manufacture' within the meaning of Section 2(f) of the Act and the respondents have not committed any illegality by requiring it to obtain registration and pay the excise duty on G.C. Sheets. 24.Before concluding, we may refer to the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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