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TMI Blog2005 (9) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... ketability, there is no evidence as to the type of PAS (with particulars of dimension) being sold in the market. In the circumstances, we do not wish to interfere in the matter. Ordinarily, we would have remitted the matter to the Commissioner. However, in this case, we find that the department has accepted the decisions of the Commissioner (Appeals) and Additional Collector passed in 1986 and 1987 holding that each of the above process do not constitute "manufacture". The respondent herein has acted on that basis for at least ten years. Hence, we do not find any intention to evade duty on the part of the respondent. We cannot expect the respondent to collect duty from its customers for the last ten years. The question of ownership was directly relatable to the clearances made in the names of M/s. VPI and M/s. SREW and, therefore, the Tribunal ought to have adjudicated upon the question as to whether the clearances were made in the name of dummy firms. Appeal dismissed. - 7814-7817 of 2004 - - - Dated:- 26-9-2005 - B.P. Singh and S.H. Kapadia, JJ. [Judgment per : S.H. Kapadia, J.]. - The issue involved in these civil appeals under Section 35L(b) of Central Excise Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w-cause notice, the department had examined the documents seized including balance-sheets and on that basis, it was alleged that M/s. Aldec Corporation had paid excise duty under Tariff Item 76.06 on behalf of so-called job processors, M/s. VPI and M/s. SREW. According to the show-cause notice, M/s. Aldec Corporation had paid excise duty which was passed on to the customers in the past and on obtaining refund from the department in the name of M/s. VPI and M/s. SREW, M/s. Aldec Corporation refunded the amounts received from the department to its customers. According to the show-cause notice, M/s. Aldec Corporation had two partners by the name, Vinay Asar and Harish Asar, whose father Vallabdas Purushottamdas Asar was a partner of a firm M/s. Sunder Das Co. According to the show-cause notice, M/s. Sunder Das Co. had let out the premises to M/s. Aldec Corporation. On behalf of M/s. Sunder Das Co., lease was signed by Vallabdas Asar as lessor whereas the lease-deed was signed by Vinay Asar as partner of M/s. Aldec Corporation (lessee). There was also an agreement between M/s. Sunder Das Co. and M/s. VPI. There was also an agreement between Sunder Das Co. and M/s. SREW. Both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration; that the earlier proceedings focussed on individual activity of slitting and the individual activity of painting; that the various different stages through which the original sheets had undergone different processes at the behest of M/s. Aldec Corporation was not examined by the department; and that the department had proceeded on the basis that M/s. VPI and M/s. SREW were independent job processors. According to the department, in the present case, on examination of the documents and from subsequent recovery, the department found that M/s. Aldec Corporation was the processor and that M/s. VPI and M/s. SREW were only its workmen/labourers and, therefore, the impugned show-cause notice had called upon M/s. Aldec Corporation to show-cause why the above activity/process taken together should not be treated as "manufacture", both on first principles as well as under Section 2(f) of the said Act, 1944. The impugned show-cause notice, therefore, did not accept M/s. Aldec Corporation as a trader but as a job processor/manufacturer. In the circumstances, the show-cause notice, in the present case, has alleged violation of Rule 174 of Central Excise Rules, 1944 read with Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w.e.f. April 1990. M/s. Aldec Corporation, therefore, submitted that they were traders of aluminium strips in the form of coils and, therefore, there was no question of payment of excise duty on such trading activity. However, in reply to the impugned show-cause notice, vide Para 14(h), M/s. Aldec Corporation submitted that they were not concerned with the show-cause notices given to M/s. VPI and M/s. SREW. The tenor of the reply of M/s. Aldec Corporation indicates that M/s. Aldec Corporation was a trader whereas M/s. VPI and M/s. SREW were job processors whereas according to the department, in view of the complete control of all the activities by M/s. Aldec Corporation, the real processor was M/s. Aldec Corporation and not M/s. VPI or M/s. SREW. In reply, M/s. Aldec Corporation submitted that the excise duty was on the activity of 'manufacture'; the duty of excise was to be imposed on manufacture of goods; that in the case of M/s. Ujagar Prints etc. v. Union of India Others reported in 1988 (38) E.L.T. 535, it has been held by this Court that in the case of processing-houses, duty was leviable on the processors not because they were owners of the goods but because they caused t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to above involved in the manufacture of PAS for venetian blinds with the intention to evade duty; that the customers were approaching M/s. Aldec Corporation for job work and that these customers did not approach M/s. VPI or M/s. SREW for job work; that in fact M/s. Aldec Corporation was the job worker or in any event, M/s. Aldec Corporation controlled all the activities. According to the Commissioner, in the present case, if one was to look to the totality of all the processes, the same would come within Section 2(f) of the Act, 1944 and that PAS for venetian blinds would emerge as an independent product under chapter sub-heading 7616.90. The Commissioner further held that the earlier decision of the department was not conclusive because in the earlier proceedings, no notice was given to M/s. Aldec Corporation; that the decisions of the Commissioner in the earlier round in favour of M/s. VPI and M/s. SREW indicate that the point of classification alone was put in issue. According to the Commissioner, in the earlier round of litigation, M/s. VPI and M/s. SREW had contended that the aluminium sheets bought from M/s. Hindalco came under tariff item 27(6) and that the slats conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamined the balance-sheets, income and expenditure statements, the lease-agreements and other documents while coming to the conclusion that the entire modus operandi adopted by M/s. Aldec Corporation (respondent herein) was to evade liability to pay excise duty. It was urged that the partners of M/s. VPI and M/s. SREW were workmen and employees of M/s. Aldec Corporation; that they received salaries from M/s. Aldec Corporation; that the expenses of M/s. VPI and M/s. SREW were borne by M/s. Aldec Corporation; that the customers treated M/s. Aldec Corporation as job processors; that excise duty was collected by M/s. Aldec Corporation on behalf of M/s. VPI and M/s. SREW and, therefore, M/s. VPI and M/s. SREW were dummy companies. Learned Counsel submitted that the real job worker was M/s. Aldec Corporation and not M/s. VPI or M/s. SREW. It was urged that on examination of the documents, the Commissioner correctly found that M/s. Aldec Corporation was statutorily obliged to obtain registration and licence for the manufacture of painted aluminium slats for venetian blinds and by not getting itself registered, breach of Rule 174 took place for which M/s. Aldec Corporation was liable. Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the combined activity of slitting, trimming, re-rolling and painting of PAS did not result in production of a new article of aluminium falling under chapter sub-heading 7616.90. In this connection, it was submitted that if two different processes, neither of which by itself amounts to manufacture, are carried on individually in different factories, no new product comes into existence. If two factories are owned by one individual, it will make no difference. Learned Counsel submitted that in the present case, the nature of the process and the nature of the finished item in contra-distinction to the aluminium sheets purchased from M/s. Hindalco had to be decided and that question has not been decided by the Commissioner. According to the learned Counsel, "article of aluminium" is an expression used in Chapter 76 to distinguish a finished product made of aluminium from commodity of aluminium which is used as a raw material to manufacture various articles. Learned Counsel submitted that in the present case, the evidence produced by M/s. Aldec Corporation (respondent herein) clearly shows that the strips sold by them was a raw-material suitable for manufacture of venetian blin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissible for the department now to contend that it was in the dark about relevant facts. Learned Counsel submitted that the entire issue was based on the nature of the activities and when the Tribunal came to the conclusion that the different processes taken individually or jointly did not amount to "manufacture", it was not necessary for the Tribunal to go into the question of ownership of the processing units. Learned Counsel submitted that whether M/s. Aldec Corporation was the real processor or whether M/s. VPI or M/s. SREW were the real processors was not the relevant question and, therefore, the Tribunal was right in not deciding that question in the present case. In the above circumstances, the learned Counsel urged that no interference is called for in the present case. 8.Before dealing with the rival contentions of the parties, we reproduce hereinbelow the relevant headings of Chapter 76 of the Central Excise Tariff Act, 1985 : Chapter 76 : ALUMINIUM ARTICLES THEREOF Heading No. Sub-Heading No. Description of Goods (1) (2) (3) 76.06 Aluminium plates, sheets (including circles) and strip, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final product was a rubberised nylon tyre cord, the intermediate product, namely, dipped nylon tyre cord, could constitute a separate identifiable product in terms of manufacture and marketability. In that case, on the question of marketability, the matter had to be remitted to the Commissioner (Adjudication). In the case of Hindustan Zinc Ltd. v. Commissioner of Central Excise, Jaipur reported in 2005 (181) E.L.T. 170, this Court held that emergence of silver chloride by filtering sulphates from mixture of zinc chloride was a process which amounted to manufacture. However, no evidence was led by the department to show that the silver chloride which emerged out of the said process was capable of being sold in the market and, therefore, although the department succeeded in making out a good case on manufacture, it failed on marketability for want of evidence. In the said case, this Court found that silver chloride was an independent identifiable product. However, the department had failed to lead evidence as to whether the silver chloride which was sold in the market having 75% silver content and the silver chloride which emerged as a by-product in filtering sulphate from mixture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars of dimension) being sold in the market. In the circumstances, we do not wish to interfere in the matter. 11.Ordinarily, we would have remitted the matter to the Commissioner. However, in this case, we find that the department has accepted the decisions of the Commissioner (Appeals) and Additional Collector passed in 1986 and 1987 holding that each of the above process do not constitute "manufacture". The respondent herein has acted on that basis for at least ten years. Hence, we do not find any intention to evade duty on the part of the respondent. We cannot expect the respondent to collect duty from its customers for the last ten years. 12.In the present case, it was vehemently urged on behalf of M/s. Aldec Corporation that ownership of the goods or ownership of the plant or machinery was not relevant. That what was relevant was the nature of the activity and not the nature of the ownership. It was urged that it was not necessary for the Tribunal to go into the question of ownership as it had taken the view that the activities did not constitute manufacture. We do not find any merit in this argument. The question of ownership was directly relatable to the clearances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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