1. This appeal arises form order in Original No.46/96 dt.22.10.96 by which the Commissioner has held that the appellants were carrying on the activity of manufacture of a new product which is dutiable and exigible. The Commissioner has noted that the appellants were carrying out the activity of manufacturing steel tubular poles which is classifiable under chapter subheading 7326.90 of the CET Act as a SSI unit enjoying under Notification No.175/86 and 1/93. It is note that they were mostly doing job work for various customers by fabricating steel tubular poles from materials supplies to them. They also manufactured street light steel tubular poles from their own materials.
The Department, after investigation, issued show cause notice calling upon them to explain as to why the process of "street light steel tubular poles" cleared by them without payment of duty should not be charged for duty, as they had suppressed the fact of its production and cleared it clandestinely. In the matter. It is also alleged that by not including the value of "base plates/brackets" and also "over time charges" collected over and above labour charges, actual labour charges collected, actual length of the street tubular poles cleared by them in their respective invoices alleged duty for a larger period can be collected.
2. The appellants denied the allegation and contended that the activity carried out by them was not a process of manufacture. They contended that no new product arose while extending the length of the poles. The poles remained "as poles" and it was not exigible. The lengthening of pipe was only to convert it into a pole and it remained as a pole. and it remains as pole. They were drilling holes and fixing brackets to it.
They were fixing three different size tubes to make into big pole, which did not result into a new commodity. However, the Commissioner negatived their contention and held that the process amounted to a process of manufacture and a new product came into existence they had suppressed the inclusion of its value in their clearances and hence they were liable to pay duty to Rs.52,951/- under proviso to Section 11 A (1) of the CE Act and imposed equal amount of penalty under Rule 173Q of the CE Rules.
3. Arguing of behalf of the appellant the Ld. Counsel reiterated the plea taken by the assessee before the Commissioner and submitted that the Revenue has not discharged their burden of proving that the activity resulted in manufacture and the new item was marketable. They were not marketing the poles as a new product and the 'pipes' were removed as 'pipes' only. He submits that they were not required to include the value of the clearances. The matter was covered by large number of judgements in their favour hence they carried a bona fide belief that the said activity did not amount to manufacture and hence larger period was not invocable.
4. Appearing on behalf of the Revenue the Ld. DR pointed out to the findings and submits that after the activity of lengthening of tubular poles resulted in emergence of a new product with a different name and it had a different characteristic and hence it has to be considered as a different product and the new 'goods' were dutiable as held by the Commissioner in para 17, which is extracted below.
"17. I have gone through the said order-in-original No.30/89 dt.21.10.91 passed by the Additional Collector of Central Excise, Madras. In that order the processes involved were not held to be manufacture as the goods removed were MS pipes, plates, channels and not tubular poles. In the present case, however, from the statement of Shri P.Mahendra Babu, Proprietor, M/s. Balamuirugan Electrical, it is seen that they had received tubular poles complete with base plates and brackets, as specified in the orders. These tubular poles were manufactured form tubular pipes, base plates and brackets by the process of swaging. By this process, a new product emerged and hence it would amount to manufacture. I, therefore, find that the order dt.21.10.91 is not relevant to the issue".
The Ld. DR drew our attention to the subsequent paras of the impugned order and submits that the suppression of facts were clear on record and hence the impugned order is correct in law.
5. The Ld. Counsel also submits that there is no cause to impose equal amount of penalty under Rule 173 Q and such imposition has been set aside in a large number of decisions.
6. On a careful consideration of the submission made by both the sides, we notice that the Tribunal decision rendered in the case of K.L.
Industries vs. CCE. reported in 1996 (85) ELT 398 (T) and in the case of Elecon Engineering Co. Ltd. vs .CCE reported in 1999 (107) ELT (T) had taken a view that this type of process of cutting, drilling or lengthening of poles or welding and structures did not amount to a process of manufacture. However, the Revenue being aggrieved with this order and wit large number of similar orders have filed appeals before the Apex Court. A Larger Bench was constituted before the Apex Court to reconsider the judgment of its own court and the Larger Bench of the Apex Court in the case of UOI Vs Man Structural reported in 2001 (103) ELT 401 has remanded the matter for de novo consideration to the Tribunal on the findings that the Tribunal had failed to consider the facts of each single appeal before it. It has been held that the Tribunal proceeded simply upon the basis that structural are not excisable of central excise duty and no the premises that there is no tariff entry which makes structural excisable to excise duty and that there was no emergence of a new identical goods and that they are not marketability. The Apex Court set aside all such orders of the Tribunal and has remanded the same for consideration in the light of the observation laid down by it.
7. We are of the considered opinion that the Revenue has first to establish that these process bring into existence a new identical product, + which is marketable and excisable in terms of the tariff headings. As the original records and process of manufacture, and the manner of marketability of the product are not furnished before us we are of the considered opinion that the matter is required to go back to the original authority for de novo consideration. The original authority shall take into consideration the various pleas raised by the appellants regarding the items did not arise as a result of manufacture and no new product came into existence and that the item is not classifiable under the said tariff heading. The original authority shall permit both sides to produce evidence and it shall appreciate the same in the light of the latest judgements after granting a personal hearing to the appellants. The appellants plea that equal amount of penalty under Section 173 Q is not impossible should also be considered . Their plea that they held bona fide belief and that larger period is not invocable should also be required to be examined by the original authority, while deciding the case in de novo proceedings. Thus the appeal is allowed by way of remand to the original authority.