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TMI Blog1984 (5) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Crude Form including ...or 26AA Iron or Steel Products -. of the First Schedule to the Central Excises and Salt Act, 1944, in order that countervailing duty in terms of the rates prescribed in either of these items could be levied under Section 2A of the Indian Tariff Act, 1934. Six other appeals filed by the appellants in relation to consignments of similar goods decided by the common order-in-appeal of the Appellate Collector of Customs, Bombay are connected with this appeal and the ratio of our decision herein will apply to those appeals as well. 4.The subject consignment was described in Bill of Entry No 1626 dated 9th August, 1972 as - "CKD Motor Vehicle Parts" castings in semi-finished condition for the manufacture of Motor Vehicles. Cover, oil cooler (Iron casting) and was assessed under Item 63 (28) and also charged to countervailing duly at Rs. 73.13 per M.T. The appellants claimed re-assessment without levy of countervailing duty, on the ground that the goods imported are castings having carbon contents more than 1.8% and hence they are "malleable iron castings" and not "steel castings". The Assistant Collector of Customs, however, held that Item 26AA(v) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts falling under Item 26AA in which duty paid iron in any crude form, including pig iron, scrap iron, molten iron or iron cast in any shape or size is used, provided duty is proved to have been paid on the iron in any crude form. The Item 26AA(iv) covers "cast iron pipes", which arc also covered by Notification No. 106/65. Hence, the view that Item 25 is wide enough to cover all iron castings, irrespective of whether they are (a) crude or primary; (b) semi-finished; or (c) finished; appears to be incorrect. Only pig iron, such as ingots, pellets, etc. would be covered by Item 25 and semi-finished and finished products of iron, such as Malleable Iron such would fall outside Item 25 and 26AA. The goods imported by the appellants are iron/malleable castings. These castings are produced in two main stages : (a) white cast iron castings and (b) high temperature annealing of these castings. The annealing processes are designed to decompose the cementite and pearlite cementite. The process takes more than 3 days and the annealing furnaces are quite different from the inciting furnaces where molten iron is produced and cast and the castings are subjected to the following processes befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26AA (v) does not speak about finished or semi-finished castings and semifinished castings are covered by it. He argued that all processes incidental to completion of a product must be completed for it to emerge as a manufactured item within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944. The Tribunal has also held that forgings remain forgings even after machining (TISCO - 1983 E.L.T. 1113) and that iron castings in semi-finished condition continue under Item 25 and countervailing duty is leviable (TELCO - 1983 E.L.T. 1122). He cited the Supreme Court decision that de-odorising was necessary if oil was to be considered as refined oil (vide DCM v. Union of India). In this light, Shri Habbu contended that the name, character and use of the castings imported have not changed. He also relied on decisions of Bench 'B' in Order Nos. 161 of 1984 and 158 of 1984 in two appeals by M/s. Jemco, holding that "iron cast in any other shape or size" is not synonymous with 'cast iron' and 'iron in any crude form' would not qualify these shapes and sizes and that iron/steel cast rolls, not subjected to final machining, polishing and grooving, could not be classified under I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing but as it is understood in the iron or steel trade. If this test is applied, the castings would remain as crude attracting duty under Tariff Item 25. As regads the points urged by the intervener, Shri Lakshmi Kumaran stated that Government has gone in appeal against the judgment of Patna High Court. Further, if a foundry undertakes detailed machining operation also, apart from proof machining etc. (which are in the nature of improving the quality of the iron castings) duty under Tariff Item 25 would be leviable before the crude iron castings are taken to the Machine Shop for further machining etc After the completion of the machining, etc. in the Machine Shop, the subject goods would be assessable under Tariff Item 68, so long as the department can prove that manufacturing activity has taken place converting the crude casting into a different product. It is not necessary that all the processes of machining, polishing etc. have to be completed to classify the product as an identifiable machine part under Tariff Item 68 of C.E.T, It is not necessary product should be an identifiable machine part to attract classification under item 68. So as the product is a manufactured prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n but all the various goods mentioned. Therefore, castings are still to be crude and not semi-finished or finished so as to conform to the general description, "iron in any crude form". It could be further argued that 'crude' means 'unprepared, not reduced to form or order, unfinished,......' unrefined, inartistic and 'crudeness' is 'raw' and to be in crude form the iron in Item 25 should be altogether raw/unfinished/unprepared/unrefined and any process intended to reduce rawness renders it other than crude. It could also be argued that in contradistinction to Item 25, Item 26AA(v) covers "all other steel castings, not otherwise specified" and is residuary in character and does not speak of semi-finished and finished steel castings, so the former, qualified by the words "in crude form", cannot include semi-finished or finished iron castings. The castings in dispute having been subjected to annealing, straightening, huffing and rough machining before shipment and the rawness having been reduced so that they are anything but crude, cannot fall within Item 25 and any other construction of the words 'in any crude form* will lead to a subjective selection of processes that may be carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able, marketable goods. We agree with Shri Lakshmi Kumaran that they will continue to fall under Item 25, till they lose their identity as castings and assume a new name, character and use. Similarly, in the case of semi-finished steel castings, levy under Item 26AA(v) would be attracted. In the present case, the goods are indubitably not motor parts and are invoiced as iron castings. As the numerous authorities cited establish, corresponding iron castings, if subjected in India to the same pre-importation processes to which the subject goods were put, would be within the ambit of Item 25. That there would be an element of discrimination and subjective selection of processes that may be carried out before the 'iron cast in any other shape or size goes outside this ambit', is inevitable, given the wide amplitude of the meaning of 'manufacture' in Section 2(f) and the various requirements of industry and commercial activity. Suffice it to say that the imported goods cannot be absolved from the levy of duty to which their indigenous counterparts would be subjected. Here we would advert to Order No. 158/84 of the Tribunal wherein it was observed, inter alia . "After-all, if a casting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court after referring to a number of decisions on "Excise matters also, "held as under : "Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. 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 but instead is recognised as new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although, it has undergone a degree of processing, it must be regarded as still relating its original identity." (underlining done). It is true that the decision is with regard to provision of Kerala General Sales Tax Act, but the ratio of decision is applicable in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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