1. In this appeal, filed by the Revenue, issue involved is whether the goods fabricated by M/s. Raunaq International Ltd. are excigible to Central Excise duty.
2.1 Shri H.K. Chaturvedi, ld. Jt. C.D.R., submitted that M/s. Raunaq International Ltd., respondents were engaged in the manufacture of steel pipes having internal and external cross-section, the external diameter of which exceeded 406.4 mm at the premises of M/s. Thermal Power Station in Orissa; that they were clearing the impugned pipes to the erection site near the turbo generator hall and demineralisation plant without following any Central Excise procedure and without payment of duty; that the Central Excise Officers detained 39.743 MTs of pipe lying with the respondents on 18-2-1993; that the Assistant Collector, under Order-in-Original No. 4/93, dated 19-7-93 had held the pipes as excisable and classified the same under sub-heading 7305.90 of the Schedule to the Central Excise Tariff Act; that the matter was remanded by the Tribunal, vide Final Order No. E/125/95-B1, dated 23-3-1995 to examine whether the pipes manufactured by them were prepared for use in structure i.e. whether they could be classified as parts of structure and whether the pipes can be said to be "goods" i.e.
whether they are marketable and are known in the trade as pipes.
2.2 The ld. Joint C.D.R., further, mentioned that the remand proceedings, the Deputy Commissioner, under Order-in-Original No.19/2003, dated 26-7-2001 has decided both the issues by holding that the network of conduits where the pipes have been used cannot be said to be structures; that as per Explanatory Notes of H.S.N., "structure" is something whose main purpose is to bear some load; that the pipes in the present matter have not been designed to help in the carriage of any load as their main purpose is to convey/carry water/steam; that the Deputy Commissioner has further given the finding that impugned pipes are capable of being marketed, that as the pipes come into existence before fitment into the various parts of plant, the plea about the immovability is not sustainable.
2.3 On appeal filed by the respondents, the Commissioner (Appeals), under the impugned order, has classified the pipes under Heading 73.08 in view of Section 37B Order No. 58/1/2002-CX, dated 15-1-2002 and has held that the small tubular segments joined together as per requirement and design are neither known in the market as pipes and tubes nor they ordinarily come to the market for being bought and sold as pipes and tubes.
3.1 The ld. Jt. C.D.R. submitted that the piping of M.S. Steel plates having external diameter exceeding 406 mm and circulating water pipe cannot be classified under Heading 73.08 of the Tariff as structures; that these are fabricated by way of bending and welding of steel sheets at side, away from the place where they are fitted, to get pipes of small running lengths; that the items emerged in the fabricated yard prior to being brought to different areas of the plant; that such pipes are known as L.P. Pipes/C.W. Pipes which are specifically classifiable under sub-heading No, 7305.90 of the Tariff; that Rule 3 of the Rules of Interpretation provides that goods will be classified in the heading which provides the more specific description; that the heading providing specific description shall be preferred to the heading providing a more general description.
3.2 He also contended that the instant matter does not fall under Paras 4(iii) and 5(i) of Section 37B Order dated 15-1-2002; that the instant issue is more appropriate to fall under the purview of Para 4(ii) which reads as under ; "Where processing of inputs results in a new product with a distinct commercial name, identity and use (prior to such product being assimilated in a structure which would render them as a part of immovable property), excise duty would be chargeable on such goods immediately upon their change of identity and prior to their assimilation in the structure or other immovable." 3.3 He submitted that pipes have taken a new identity before being fitted in the plant and are distinct from the M.S. plates and are thus exigible to Excise duty.
4. Countering the arguments, Shri P.S. Raghunathan, ld. Advocate, submitted that the respondent entered into an agreement with M/s.
Orissa Power Generation Corporation Ltd. for work of fabrication at site, installation, testing and commissioning hangers and support out of pipes and tubes prepared out of duty paid materials as per specifications; that there was no manufacture of pipes and tubes as the process of work related to parts of the structures which were fabricated at site and attached with earth as permanent fixtures; that accordingly the impugned goods are classifiable under Heading 73.08 as structures; that the photographs of different segments viz. (a) Raw water connection to C.W. Duet, (b) Rolling of plate of preparation of bed, (c) Raw water outlet from Raw water pump house, (d) Rolling of sheets BCW Pumps House outlet Raw water connection to duplex fitter, etc., clearly show that small segments of tubular form of sheets welded and joined together are the parts of the power plant; that further some of such segments are brought down to 4 mts. deep pit and were joined with pre-laid pipe line with welding; that the impugned goods made as per requirement and design are neither known in the market as pipes and tubes nor they ordinarily come to the market for being bought and sold as pipes and tubes. He also mentioned that as per Para 5(i) of Section 37B Order, the Turn Key Projects like steel plants, cement/power plants involving supply of large components, machinery, equipments, pipes and tubes for their assembly, installation and erection etc., at site are not excisable goods for imposition of Central Excise duty; that the said Para 5(i) applies squarely to them.
4.3 Finally, the ld. Advocate submitted that the activity of cutting of steel plates was not done by the respondents; that it was done by the Job Worker, M/s. Vaishey Engineers & Erectors, whom the sub-contract was awarded to by the respondents; that the work of fabricator, erection and commissioning of rolled welded pipes were done by the sub-contractor and as such the sub contractor is the manufacturer and if any duty is payable, the same should be demanded from the sub-contractor. He relied upon the decision in the case of J.S.T.Engineering Services v. C.C.Ex., Jamshedpur - 2001 (133) E.L.T. 350 (T) - 2001 (46) RLT 1 (CEGAT) wherein it has been held by the Tribunal that "manufacturer" is the one who actually undertakes the manufacturing activity and the Tribunal did not hold the appellant therein as manufacturer as they had awarded the job for fabrication, erection, testing and commissioning of C.W. piping system to another firm.
5. We have considered the submissions of both the sides. The present impugned order has been passed on remand by the Appellate Tribunal vide Final Order No. E/125/95-B1, dated 23-3-1995. The Tribunal had remanded the matter as under :- "As can be noticed from the above extracted portion of work, executed by the appellants, there are various types of pipes manufactured like straight pipes, overground pipe work, underground pipe work, pipe rack. The same has been fabricated,............tested, and commissioned by appellants involving civil work also. Therefore, for answering the points raised before us, it is necessary to know the detail facts, as to how the pipes emerged and how the fitting and commissioning operation was carried out. It is not clear as to whether, the entire pipes had emerged before fitting operation, or it emerged after fitment with structures after civil work. It is also not clear as to whether the pipes were known in the market, in commercial and in Trade Circles as 'Pipes', "in the condition in which it was removed before fitment. These factual points are required to be examined for answering the question as to whether there is emergence of goods, as known in the market for the purpose of exigibility or they are mere fitments which because part of movable property. Both the authorities have not examined these aspect in the light of drawings, manufacturing process and as to how the said pipes are known in the trade. It is also required to be examined as to whether these pipes have been 'prepared for use in structures'. If so then the claim for classification under Chapter Heading 7308 is required to be considered. As there is lack of factual information, the case, as noted by us, therefore, it is just and proper to remand this case to the original authorities for de novo consideration, in the light of the observations made by us by giving full opportunity to the appellants to place their evidence, on the points indicated by us.
The original authority shall decide the case as per the law in the light of the evidence and Supreme Court relied by the appellants, after giving due hearing to the appellants." 6. A perusal of the remand order reveals that the Tribunal had remanded the matter to ascertain as how the pipes had emerged and whether the pipes were known in the market as pipes and whether these pipes had been prepared for use in structures and if so whether the claim for classification under Chapter 73.08 was required to be considered. It is thus apparent that the question as to who is the manufacturer was not remanded to the adjudicating authority. As this aspect was not remanded by the Appellate Tribunal and no appeal having been preferred by the respondents, they cannot raise the plea now that they are not the manufacturers.
7. It has been contended by the Revenue that the impugned goods have been fabricated by way of bending and welding of steel sheets to get pipes of small running lengths. The respondents on the other hand have contended that the goods fabricated are small segments of tubular form of sheets welded and joined together to form a part of the power plant as per design and specification and are in some places embedded in the earth in concrete foundation and as such are not goods leviable to Central Excise duty. We do not find any force in the submissions made by the respondents. The Apex Court right from the judgment in the case of Union of India v. Delhi Cloth & General Mills -1977 (1) E.L.T. (J 199) (S.C.) has held that to amount manufacture a distinct commodity having new name, character or use should emerge.
8. In the present appeal, after processes have been undertaken by the respondents, a distinct product having a new name and character or use comes into existence. It cannot, therefore, be claimed by the respondents that the activity of bending and welding the steel sheets into pipes does not amount to manufacture. It is also the contention of the respondents that the products fabricated by them are not pipes classifiable under Heading 7305.90 of the Tariff but are parts of structure falling under Heading 73.08. It has also been contended by them that the product is not marketable as it is made as per designs and specifications of their customer. There is no force in any of the submissions made by the respondents. The pipes and tubes having circular cross-section and the external diameter of which exceeds 406.4 mm are classifiable under Heading 73.05 of the Tariff. The explanatory notes of the HSN clearly mentions below Heading 73.05 that "the tubes and pipes of this heading are obtained, by for examples, by welding or riveting performed, unclosed and tubular shapes produced from flat-rolled products". The explanatory notes further mentions that the product of this heading, "includes line pipes of a kind used for oil or gas, casings for oil or gas wells, tubes for long distance waterlines or slurry mains for coal or other solid materials, tubes for piling or structural columns, as well as hydroelectric conduits, usually reinforced with rings." It is thus apparent that pipes used for structural columns remain classified under Heading 73.05. Heading 73.08 applies to structures and parts of structures; merely because these pipes are used in the fabrication of plants does not make their structurals. If the contention of the respondents is accepted, then every pipe line which is laid underground will be considered as part of the structurals and not the pipe lines. The Appellate Tribunal has considered the question as to whether the pipes are excisable goods in the case of J.S.T. Engineering Services v. C.C.E., Jsr. reported in 2001 (133) E.L.T. 350 (T) = 2001 (46) RLT 1 (CEGAT-Del.) relied upon by the Id. Advocate for the respondents. The Tribunal has held in the said decision that the steel plates after being cut to required size, are fed to bending machine from where these come out in bent position and are welded on one side and the edges are welded after laying down in the excavated trenches and thereafter welding inside is also done. It is apparent from the process that a pipe comes into existence before being placed in trenches and it is only for the sake of convenience that inner welding is done thereafter. The Tribunal applying the' test laid down in the case of Municipal Corporation of Greater Bombay v.Indian Oil CorporationTriveni Engineering & Industries Ltd. v. CCE - 2000 (120) E.L.T. 273 (S.C.) = 2000 (40) RLT 1 (S.C.) held in the said decision that the steel pipes in question satisfy the test of marketability and as such are leviable to excise duty. The ratio of decision in J.S.T. Engineering Services case squarely applies to the facts of the present matter also. The mere fact that the pipes are fabricated as per the designs and specifications of the customers will not make them non-marketable. The marketability test requires that the goods should be marketable as such. It is not required that they should actually be marketed.
Reliance of the respondents on Section 37B as per Board's order dated 15-1-2002 also does not help them at all as rightly pointed out by the ld. Jt. CDR, that the clarification to that effect, containing in Para 4(ii) of the said Order applies in the present matter. It has been clarified in the said para that where processing of inputs results in a new product with a distinct commercial name, identity and use, prior to such product being assimilated in a structure, excise duty is chargeable. In the present matter, the pipes come into existence before they are being assimilated in a structure. Para 4(iii) of the said Order does not cover the facts of the present case. It is mentioned in Para 4(iii) that where change of identity takes place in the course of construction or erection of a structure which is an immovable property, then there would be no manufacture of 'goods'. This is not so in the present matter as the pipes are coming into existence separately and then these are used in the erection. Similarly, Para 5(i) of the said Order is not applicable to the facts of the present matter. The said para clarifies that the Turn Key projects will not be considered as excisable goods for the purposes of levy of Central Excise duty. This para nowhere provides that the duty will not be leviable on pipes. The word 'pipes' has been used to describe the Turn Key projects. According to this para, Turn Key projects, like, plant, cement plant, power plants, etc., involving supply of large number of components, machinery, pipes and tubes for their assembly will not be considered as excisable goods - what has not been considered as excisable goods is the Turn Key projects comprising various machines and machineries, equipments, pipes, tubes, etc. and not individual machines, machinery, pipes and tubes, etc. This is evident from the last sentence of Para 5(i) of the said Order which reads as "the components, however, would be dutiable in the normal course." If the contention of the appellants is accepted, no machines or machinery forming parts of any Turn Key projects will be chargeable to duty at all, if it is fabricated by the manufacturer himself for the purposes of Turn Key projects. We, therefore, set aside the impugned order and allow the appeal filed by the Revenue.