1. This appeal has been dismissed for default by order No. 322/86-B1 dated 5-6-1986, under Rule 20 of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules 1982. The appellants have now applied for restoration of their appeal, submitting that there had been no wilful negligence by them when they did not appear on 5-6-1986. They say they are quite serious about the appeal but due to illness they were not able to engage an advocate in time and entrust the case to him to represent them. They also had difficulty in getting a train ticket, it being summer season.
2. Considering all facts and circumstances, we restored the appeal to its original number and prolceeded to hear it.
3. On behalf of M/s Srinivasa Metal Industries, Mr. Rao's main point was that the circles were cut from duty paid aluminium strips, and since circles and strips fell in the same sub-item, no duty would be leviable on the circles. Furthermore, the circles came into being only as intermediate forms in the manufacture of utensils and were not sold by them or cleared by them from the factory. They were accordingly, not liable to duty.
4. Mr. Jain the learned counsel for the department said that a circle is a different goods obtained from the strip; it may be true that strip was duty paid, but as soon as circles are cut out of it, a new article came into being with a new name, a new character and a new use.
Therefore, in keeping with various High Courts and Supreme Court rulings, the circles being a new manufacture as understood in section 2(f) of the Central Excises and Salt Act, it must pay duty as a fresh item. Furthermore, a "circle" is an item in the heading under item 27 of the Central Excises and Salt Act and strip is another. Therefore having been specifically named as a commodity under the tariff, it is natural and right that the circle, when it appears for the first time, from whatever raw material, should pay duty. He said that in the Hyderabad Asbestos case the New Delhi High Court ruled that when anything is named in the tariff it must, pay duty and that we need not go into the question of whether there has been a manufacture. There is no dispute that the circles had been made.
5. In accordance with Rule 9 and Rule 49 of the Central Excises and Salt Act, and their retrospective amendment, all intermediate cases should pay duty whether they are cleared or not. These circles may not have been cleared, but that will not protect them from paying duty. In support of his arguments he quoted 1986 (24) ELT 507 - 1984 (18) ELT 319 (Tribunal).
6. Unfortunately the department's case is based on very thin ground; that is, that cutting of the sheets into circles has brought in a new manufacture. This may well be so, but excisability does not follow.
Excisability follows only when the duty has not been paid and this is a lesson that we learn from the classic judgments of the Supreme Court in Delhi Cloth Mill and South Bihar Sugar Mill. In the Delhi Cloth Mill case, the oil was disqualified from entry into the duty item, because it had not undergone all the processes that would qualify it for the entry. The oil had never paid that duty before, which it would have paid had it entered the item. The Hon'ble Supreme Court's injunction must not be understood to mean that a manufacture means excisability.
Manufacture carries excisability only when the article produced or manufactured enters an item and attracts that duty for the first time, never having paid that duty, in any other form or shape. To repeat, excisability is relevant only when fitting a product into, an item it had never been fitted into before. It follows accordingly that if the product has been in that item, has been charged duty under that item, in whatever form, it would never have to pay that duty again. To change the statement a little, as long as the product, whatever its changes in form and shape, remains in the item or heading in which it was first charged to duty, it is not lawful to impose on it the same duty over again. This is repeat taxation and is not permissible under the law at present.
7. However, if the change in form or shape in the product impels it into a different heading, then there is no stopping the excisability that follows. This is not double taxation, because it is not same duty that is being recovered, but a different duty under a different heading.
8. In the case before us, item 27(b) covered plates, sheets, circles and strips shapes and sections. These products were assessable with the same rate of duty or we might say, one rate of duty, meaning thereby, that in whatever form the aluminium may be, if it is one of these forms, it is liable to this duty. The duty is the same whether the aluminium is presented for assessment as a sheet or a circle or a plate or a strip. This grouping carrying one duty, presents one item or heading, and once that item or heading duty is paid, then any article in the grpup will remain duty paid under that sub-heading even though it changes its shape or forms from one into any of the others in the group; were that not so there would be a serious anachrosim in the system. A plate in general is an aluminium product with plane surfaces and right angled corners; the opposite sides are equal. The sheet would be of the same dimensions except that it would be thinner than the plate. These two products can be put into circles, a form with plane surfaces but bounded by points equidistant from its centre. It is not difficult at that stage to cut from this circle a form that would accord with the definition of a sheet or plate, although this sheet or plate will be smaller than the sheet or plate from which this circle, the source of the present sheet/plate, is cut. According to the present philosophy, we can see in our mind's eye, the central excise department demanding duty on the sheet again, because it has appeared from a source that was a circle. It is doubtful, if they will listen to any plea that the sheet on which they demand duty, had already paid duty as a sheet once. They will see only a sheet that has come out of a circle.
The unnatural product, of course, as must be clear by now, is that the very duty is levied a second time on the sheet as a sheet.
9. But if the tariff has an item circle distinct from the item that covers "sheets or strips", the duty demanded on the circle cut from the strips will be a new duty; there is no impropriety in recovering such duty, because it is a duty that the substance, when it turned into circle from sheet, had never paid before.
10. The SDR sought support for his arguments from 1984 (18) ELT 319 - re : M/s Lalubhai Amin Chand. The Tribunal decided that aluminium circles cut from sheets were a manufacture and so must be charged to duty again as circles. This decision was founded on the Supreme Court's judgment in Sidhi Ninyala Coconut AIR 1974 page 1111, to say that there was no objection to taxing the same commodity at different stages as commercially different articles. But the Supreme Court said so only in respect of the two entries 5 and 5A in Schedule HI of the Andhra Pradesh Sales Tax Amendment Act, 1971, one entry covering "coconuts of all varieties" and the other "watery coconut". The court accepted the contention that these were two distinct commodities; it also accepted that the same commodity could be taxed at different stages; but it never said that it could be taxed with the same tax again and again. We ourselves say that the same commodity can be taxed any number of times, if it is levied with a new tax each time a change, howsoever minor, takes place.
11. In the Empire Industries decision 1985 (20) ELT 179 the Supreme Court made certain very significant observations. At para 20 it stated the points for consideration, and in the first point it observed : In other words whether these various processes carried out by the petitioner company amount to bringing into existence different and distinct goods, commercially known as such, to attract levy of duty under Section 4 of the Central Excises and Salt Act, 1944.
In para 23 it quoted a decision in 1978 ELT J 389 in which it observed : 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".
12. The Supreme Court saw manufacture under the central excise laws as a manufacture of articles mentioned in the relevant items of the First Schedule; when such articles come into existence as completed product and liable to excise duty under that schedule, there would be a tax. We must not forget that all these detailed discussions which the Hon'ble Court embarked upon, were for a dispute that arose on whether a processed cotton fabric could be called a manufacture so that it would be levied to duty, even after it had paid duty as unprocessed cotton fabric. The manufacturer said that the cotton fabric remained a cotton fabric even after it was bleached, dyed and printed etc., which from the strictly technological point of view, is absolutely correct. But the point was 'not that there was such a new product, but whether there was been a manufacture relevant to the laws of central excise and relevant to the new definition of manufacture given, which became the matter of contest before the Supreme Court between the department and the cotton fabric processors. The new laws provided for a heading for the processed cotton fabrics, separate and distinct from and in addition to the unprocessed cotton fabric. The result was that the court saw processed cotton fabrics as a manufacture in terms of the law because the law required such processes to be regarded as a manufacture to be levied with a separate and distinct duty of its own, under its own separate head. There was thus no further room for debate whether the processing of cotton fabrics became a manufacture in terms of the First Schedule, because we are presented with a situation where it (processing) brought forth a processed cotton fabric, where there had been no such fabric, and such processed fabric fitted perfectly into the item for processed fabrics and was therefore, required to pay that duty on processed fabrics which it had never paid before.
13. We do not think there is any warrant for levying duty on these circles when they have been cut from strips which 'had paid the very duty demanded now. Since the circles and the sheets, listed in the same heading, are subject to the same duty, they are immune to that duty once they have paid it under any of the forms listed there. There is no warrant for holding every change in form must be visited with duty as sought by the central excise. We therefore, consider that the action of the central excise department to be incorrect. The appeal is allowed and we set aside the Appellate Collector's order.
14. I had the benefit of perusing the order of my learned brother Shri H.R. Syiem. I regret I am unable to agree with his findings.
15. The appellants received 42403 Kgs of aluminium strips in coils from M/s Hindustan Aluminium Corporation Limited, Renukoot, Mirzapur. They did not show the item in their raw-material accounts. The appellants were manufacturing circles out of aluminium strips and have not make necessary entries in the R.G.I register as having manufactured circles.
These circles were also removed by them from the factory without cover of gate passes. The circles made out of 2526 Kgs. of aluminium strips were more than 1.22mm of thickness and exceeded the exemption limit to attract central excise duty under tariff item No. 27(b). Since the appellants had contravened the provisions of Rule 173-F of the Central Excise Rules, 1944, a show cause notice was issued to them during May, 1975. The appellants received the notice on 14-6-1975 and in their reply urged that the strips had suffered central excise duty at 40% as could be seen from the invoices. The appellants were converting the strips into domestic utensils. They have maintained accounts for the utensils manufactured. The appellants are not manufacturers of circles and have not manufactured the same for its removal as circles. In the process of manufacture of domestic utensils, the conversion of sheets or strips into circles was the first operation. The appellants also urged that Item 27-b has no application. The Deputy Collector in his order dated 18,-5-76 rejected the contentions of the appellants that the circles made during the course of manufacture of preparation of domestic utensils were not sold. He was of the view that the strips were converted into domestic utensils and conversion of strips into circles was an intermediary process showing that circles were manufactured by the appellants. He held that the contravention was proved. There was a demand of duty under Rule 9(2) of Central Excise Rules, 1944 and penalty of Rs. 750/- was imposed. There was an appeal to the Appellate Collector, Madras, who confirmed the findings in his Order dated 6-8-76. There was a revision application before the Board and on 11-3-1978 the Board observed that by cutting strips into circles a separate article of distinctive name is produced and the same was correctly taxable under Item 27(b).
16. It appears that the appellants preferred a writ petition before the Andhra Pradesh High Court, who remanded the matter for fresh disposal according to law. On transfer the revision application is being treated as an appeal.
17. The admitted facts show that the appellants first cut aluminium strips into small circles in circular shapes and ultimately use them for the manufacture of aluminium utensils. Item 27(b) refers to manufacture of plates, sheets, circles, strips, sheets and Sections in any form or size not otherwise specified. It is well-settled that under Section 3 of the Central Excises and Salt Act, 1944 the levy and collection of duty arises on goods produced or manufactured in India.
The first schedule refers to the same quantum of duty in regard to plates, sheets, circles, etc. These items are, no doubt, under the same sub-heading. But the crucial question would be whether the activity of the appellants would amount to manufacture. If a person manufactures plates, sheets, circles, strips, etc. then he would be liable to duty.
It may be that the sheets are duty paid. But when sheets are cut and converted into circles it would amount to a manufacture as circles are known in the trade parlance as a distinct commodity. Similarly, if strips are made from duty paid sheets it would amount to manufacture under Section 2(f) as the definition includes all processes incidental or ancilliary to the completion of the manufactured product. In this case it is not open to the appellants to contend that circles are only the intermediary product for the manufacture of domestic utensils. For that matter even intermediary products are liable to excise duty. The mere fact that they are not removed from the factory would not be a factor because: the taxable event is the manufacture of the goods. In 1985 (20) ELT 280 (Delhi), Metal Forgings Pvt. Ltd. and Anr. v. Union of India and Ors., the Hon'ble Delhi High Court has observed as under : "An intermediate product which is by itself an excisable article is liable to excise duty even though it is not removed from the factory because the duty of excise is on manufacture or production of goods.
The taxable event is the manufacture of the goods and not their removal from the place of the manufacture." 18. The identical question as the one involved in the present proceeding came up for decision in 1984 (18) ELT 319 (Tribunal) Lallubhai Amichand Ltd., Bombay v. Collector of Central Excise, Bombay.
The appellants therein were engaged in the manufacture of aluminium utensils and for the purpose of manufacturing the products, they were cutting out aluminium circles falling under Item 27(b) from aluminium sheets. The appellants were paying duty at the stage of circles but were paying duty at the final product stage, that is, the utensils! They were also not following the procedure laid down under Section 56A.A show cause notice was issued. In the adjudication proceedings ultimately there was a demand for duty. A revision was filed and same was transferred to the Tribunal. After considering several decisions of the Tribunal and, also, following the decision of the Supreme Court in 1978 ELT 0 389), Union of India v. Hindu Undivided Family Business known as Ramlal Mansukhrai, Rewari and Anr., the Tribunal did not agree with the appellants' contention that circles would not be treated as manufacture or that they were not liable to duty if they were made out from duty paid sheets. The Tribunal has held that the circles made from duty paid sheets constituted manufacture and were liable to payment of duty unless there was an exemption to that effect or procedure for claiming proforma credit of duty paid and followed. This decision is directly on the point and no arguments were placed to come to a different conclusion.
19. I must also point out that circles are specifically described in the tariff item. It has been held in 1980 CLT 735, Hyderabad Asbestos Cement Products Ltd. and Anr. v. Union of India and Ors., that if the Legislature had treated an article to be a manufacture, the argument is not open that the process is not manufacture. In this case cutting of circles from duty paid aluminium sheets would amount to manufacture.
The grouping of plates, sheets, circles, strips, etc. under one sub-item is merely for the purpose of convenience. The charging of identical rate of duty would only indicate that the Legislature in its wisdom has considered that these products should be grouped together.
One cannot infer therefrom that when a circle is made out of a duty paid sheet, the liability of duty would not arise. Once it is conceded that it is a manufacture, then conversion of sheets into circles or vice versa would be liable to duty. Any other interpretation may amount to ignoring the definition of Section 2-f or reading into the schedule words which are not indicated therein. If a contrary view is to be taken then the principle should apply to other group entries as well.
Item 26AA(ia) refers to bars coils, girders, beams, etc., under the same Sub-heading. The same amount of duty is prescribed; but one cannot hold that a conversion of bars,, into angels or rods into girders would not be liable to duty, even though the raw-materials are duty-paid.
20. The concept of manufacture is well-settled and the members principles have been emphasised from the earliest decision in the case of Delhi Cloth and General Mills [1977 (1) ELT (J 199) (S.C.)]. In the recent decision of the Supreme Court reported in 1985 (20) ELT 179, Empire Industries Ltd. and Ors. v. Union of India and Ors., the Court has laid down in paragraph 30 as follows : "The taxable event under the Excise Law is 'manufacture'. The moment there is 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 'manufacture' takes place and liability to duty is attracted." This observation proves that when the identity of the product is changed, then it involves manufacture. Circles are definitely known as a different commodity commercially from sheets. There is a transformation of sheets into circles. The contentions of the appellants that the circles are only intermediary products or that they are not manufacturers of circles will not be convincing arguments.
21. Hence the mere fact that circles and sheets are listed in the same heading and being subject to the same amount of duty would not confer any immunity on them to hold that once they had paid duty, they would not be liable for further payment even though the process would amount to manufacture. I must also point out that no hardship would be caused to the assessee. They can always rely on proforma credit and follow the procedure prescribed under Rule 56A. If a manufacturer omits to do so, he has to take the consequences of his omission and it is not open to him to agitate that the products are not excisable. I am, therefore, of the view that the orders of the authorities below are correct and the appeal should be dismissed.
1. Appeal No. ED(SBXT) 247/ 76-B1 of M/s Srinivasa Metal Industries came up before Special Bench Bl of this Tribunal, consisting of Members Shri H.R. Syiem and Shri M. Santhanam. There was a difference of opinion between the two learned Members. Accordingly, the matter was referred to me as President, in accordance with the proviso to Sub-section (5) of Section 129C of the Customs Act, 1962, read with Sub-section (1) of Section 35D of the Central Excises and Salt Act, 1944.
2. The matter was listed for hearing before me. Copies of the separate orders recorded by the two learned Members were furnished to both sides. The two sides were also furnished with a copy of the point of difference as formulated by the two learned Members. This read as follows :- "Whether duty can be levied on circles made from duty paid strips.
The relevant item 27(b) covered plates, sheets, circles, strips, shapes and Sections." 3. Shri G. Kameshwara Rao, the learned advocate who appeared for the appellants, submitted at the outset that the point of difference needed to be reformulated. It was however pointed out to him by the Bench that under Section 129C(5), it is for the Members of the original Bench to state the point or points on which they differ. Where there is an agreed formulation by them, as in the present case, it would not be open to the President, on the basis of a request from either party, to make an addition or amendment. The learned advocate accepted this position.
4. The Bench also pointed out to Shri Kameswara Rao that there was a decision of the Tribunal which would be relevant to the case, though not referred to by either of the two learned Members. This was the decision of a Larger Bench of the Tribunal in the case of Guardian Plasticote Ltd., Calcutta v. Collector of Central Excise, Calcutta and Ors. [1986 (24) ELT 542 (Tribunal)]. It was suggested to the learned advocate that he might take this decision into account while making his submissions.
5. he learned advocate submitted that the view taken by Member Shri H.R. Syiem was correct, and should be agreed with. If this was done, the appeal would succeed. He cited a number of decisions in support of the appellants' case. Although it was stressed by the Bench that the present hearing was only with reference to the point of difference as formulated by the learned Members of the original Bench, the authorities cited by the learned advocate had reference also to other grounds taken by the appellants.
6. 0ne argument of the learned advocate was that in the present case there was no dispute that aluminium strips were converted into circles by the appellants, and these circles were then converted into utensils.
The appellants were manufacturers of utensils. They did not set out to manufacture circles, nor did they sell the circles. He submitted that in these circumstances they could not be held to be manufacturers of circles. In support of his contention he cited the following judgments :-Union Carbide India Limited v. Union of India and Ors.Geep Industrial Syndicate Ltd. v. Central Government and Ors.
Bombay High Court in the case of Light Metal Works and Ors. v. Union of India and Anr., [1986 (25) ELT 613 (Bom.)]; Calcutta High Court in the case of India Foils Ltd v. Union of India (1982 ELT 966 (Calcutta); and Government of India as Revisional Authority in the case of Oriental Metal Pressing Works Pvt. Ltd. [1981 ELT 962 (G.O.I.)].
7. A slightly different argument, namely, that mere cutting would not amount to manufacture, was also advanced by Shri Kameswara Rao. In support he cited the following judgments :- Karnataka High Court in the case of Y. Moideen Kunhi & Co. vs Collector of Central Excise, Bangalore and Ors. [1986 (23) ELT 293 (Karn.) (Karnataka)];Collector of Central Excise, Madras v. Synthetic Cutting Tools Manufacturing Co., Madras [1987 (27) ELT 353 (Tribunal) (Cegat SB-D)].
8. Shri Kameswara Rao also made the submission that a change in the identity of an article is normal during the process of repairs, and this would not amount to manufacture. In this connection he relied upon the order of the Tribunal in the case of Shriram Refrigeration Industries Ltd. v. Collector of Central Excise, Hyderabad [1986 (26) ELT 353 (Tribunal) (Cegat)]. The relevance of this citation is, however, not apparent.
9. With reference to the specific point of difference, involving the question of double taxation, the learned advocate cited the decision of the Supreme Court in the case of Union of India and Ors. v. Tata Iron & Steel Co. Ltd. (AIR 1976 SC 599). This case related to excise duty on steel ingots manufactured from duty pafid ingot moulds and bottom stools, in admixture with non-duty paid scrap and hot metal. It is judgment, the Supreme Court had observed that "there cannot be double taxation on the same article".
10. Shri Kameswara Rao accordingly submitted that the view of Member Shri Syiem was correct.
11. On behalf of the Department, Shri Jain's first contention was that sub-item (b) of Central Excise Tariff Item 27 read as follows :- Since circles (of aluminium) had been specifically mentioned in the category of "manufactures", it was not open to the appellants to contend that the circles were not manufactures or had not been manufactured. In this connection Shri Jain referred to para 7 of the Supreme Court judgment in the case of Union of India v. H.U.F. Ramlal Mansukhrai, Rewari and' Another [1978 ELT (J 389)]. He submitted that once an article is specified in a tariff entry the question of interpreting the entry does not arise. Shri Jain also submitted that in a group entry, each item which has been specified is separately liable to tax. In this connection he referred to the judgment of the Supreme Court in the sales tax case of State of Tamil Nadu v. Pyare Lal Malhotra [1983 ELT 1982 (S.C.)]. He also submitted that rulings on sales tax matters were- relevant for Central Excise duties, and placed reliance on the judgment of the Supreme Court in the case of Indo-International Industries v. Commissioner of Sales Tax. Uttar Pradesh (ECR C 12. Shri Jain cited the following judgments to support the view that intermediate goods were also liable to excise duty :- Allahabad High Court in the case of Oudh Sugar Mill Ltd. v. Union of India and Ors. [1982 ELT 937 (All.)];Katihar Jute Mills Ltd. v. Inspector of Central Excise and Ors.Davangere Cotton Mills Ltd. v. Union of India and Ors.
He also cited an unreported order No. 715/86-B1, dated 4-11-1986 of the Tribunal in the case of Collector of Central Excise, Vadodara v.LakhanpaJ National Ltd., Baroda.
13. For the contention that marketability is not the criterion for levy of duty, Shri Jain relied on the following judgments :- Bombay High Court in the case of M.R.F. Limited v. Union of India and Ors. [1985(22) ELT 5 (Bom.)];Kores India Ltd. v. Collector of Central Excise, Bombay 14. In support of the contention that manufacture was involved, Shri Jain relied on the order of the Tribunal in the case of Aditya Mills Limited, Rajasthan v. Collector of Central Excise, Jaipur [1984(4) ETR 271]. He also referred to the Tribunal's decision in the case of Lallu-bhai Amichand Ltd., Bombay v. Collector of Central Excise, Bombay-1 15. On the question of double taxation, Shri Jain submitted that there were a large number of decisions which would permit what appeared to be double taxation in a case like the present. He cited the following decisions :-A. Hajee Abdul Shakoor and Company v. State of Madras Supreme Court in the case of Shri Siddhi Vinayaka Coconut & Co. and Ors. etc. v. State of Andhra Pradesh and Ors. (1975 1 SCR 440); Supreme Court in the case of Avinder Singh etc. v. State of Punjab and Anr. etc. [1979 (1) SCR 845]; Madras High Court in the case of Brakes India Ltd., Madras v. Superintendent of Central Excise, Madras and Ors. [1986(26) ELT 211 (Mad.)];Bhadrachalam Paper Boards Ltd., Khammam v. Collector of Central Excise & Customs, Hyderabad [1984(18) ELT 229(A.P.)];Union Carbide India Ltd., Calcutta v. Collector of Central Excise, MadrasCeakay Rubber Industries, Changanacherry, Kerala v. Collector of Central Excise, Madras [1983 ECR 687D (Cegat)];Mahindra Engineering and Chemical Products Ltd., Pimpri, Pune v. Collector of Central Excise, Pune [1984(18) ELT 680 (Tribunal)];Jai Hind Process and Printing Depot, Rajkot, v. Collector of Customs & Central Excise, Ahmedabad [1985 (22) ELT 195 (Tribunal)]; andBritish India Corporation Ltd., Dhariwal v. Collector of Central Excise, Chandigarh [1986 (25) ELT 725 (Tribunal)].
16. Shri Jain submitted that the judgment of the Supreme Court in the Avinder Singh case clearly showed that double taxation was not unconstitutional. Following the above decisions, even if the circles came into being as intermediate goods in the manufacture of utensils, they were nevertheless chargeable to duty. The position had been placed beyond doubt with the amendment of Rules 9 and 49 of the Central Excise Rules, made retrospective through the Finance Act of 1982. This was a case of multi-point taxation of raw materials, components etc., which was quite legal.
17. Shri Jain also placed reliance on the decision of the Larger Bench of the Tribunal in the case of Guardian Plasticote Ltd., as also the Supreme Court judgment in the case of Empire Industries [1985 (20) ELT 179 SC), from which the Larger Bench decision derived support.
18. Shri Jain therefore submitted that the view expressed by the learned Member Shri M. Santhanam was the correct one and should be agreed with.
19. In a brief reply, Shri Kamesware Rao submitted that the decision of the Tribunal in the case of British India Corporation Ltd., Dhariwal v.Collector of Central Excise, Chandigarh [1986 (25) ELT 725 Tribunal] (vide para 15 above) dealt with the question whether duty should be levied on the end-product or at an earlier stage and was therefore not relevant to Department's contention.
20. Shri Kameswara Rao also submitted that the decisions of the Supreme Court in the case of Union Carbide Ltd., and Geep Industrial Syndicate Ltd., cited by him, were the latest decisions of the Supreme Court, and were binding on every one. Any decisions to the contrary were no longer good law.
21. While reiterating that the view of Member Shri Syiem was the correct view, Shri Kameswara Rao added a plea that in any event the penalty of Rs. 750/- should be set aside.
22. I have carefully gone through the orders of the two learned Members. I have also considered the arguments advanced at the hearing before me.
23. In his attempt to support the order recorded by Member Shri Syiem, the learned advocate of the appellants advanced a number of grounds.
One of these was that double taxation was not permissible. The others were the following :- (1) Although aluminium circles might have come into existence, there was no manufacture of circles, because the end-product was the aluminium utensil; (2) Mere cutting of aluminium strips into circles would not amount to manufacture; (3) Change of identity of an article during repairs would not amount to manufacture.
In his turn the learned SDR cited authorities against these propositions. As was pointed out to Shri Kameswara Rao at the outset, the present Bench is concerned only with the point of difference between the two learned Members constituting the original Bench. It is on this point that the President has to give his decision and he cannot entertain requests to vary the point or to add other points. This aspect has been dealt with in para 11 in my order in the case of Jayashree Insulators Ltd., Hooghly v. Collector of Central Excise, Calcutta-II [1987 (28) ELT 279 (Tribunal)], and I need not repeat those observations. Therefore, with great respect to the learned advocate, arguments as regards points on which the Members of the original Bench did not differ are not of relevance so far as the proceedings before me are concerned.
24. The point of difference, as formulated by the two learned Members, has been set out in para 2 above. Reading this along with the separate orders recorded by the two learned Members, it is clear that Member Shri Santhanam rejected the various arguments advanced on behalf of the appellants, including the argument that there was no "manufacture". For his part Member Shri Syiem accepted only the argument of the appellants based on "double taxation" or "repeat taxation". This will be seen from the following extracts from his order :- "6. Unfortunately the department's case is based on very thin ground; that is, that cutting of the sheets into circles has brought in a new manufacture. This may well be so, but excisability does not follow. Excisability follows only when the duty has not been paid and this is a lesson that we learn from the classic judgments of the Supreme Court in Delhi Cloth Mill and South Bihar Sugar Mill.... To repeat, excisability is relevant only when fitting a product into an item it had never been fitted into before. It follows accordingly that if the product has been in that item, has been charged duty under that item, in whatever form, it would never have to pay that duty again. To change the statement a little, as long as the product, whatever its changes in form and. shape, remains in the item or heading in which it was first charged to duty, it is not lawful to impose on it the same duty over again. This is repeat taxation and is not permissible under the law at present.
7. However, if the change in form or shape in' the product impels it into a different heading, then there is no stopping the excisability that follows. This is not double taxation, because it is not same duty that is being recovered, but a different duty under a different heading.
9. But if the tariff has an item circle distinct from the item that covers "sheets or strips", the duty demanded on the circle cut from the strips will be a new duty; there is no impropriety in recovering such duty, because it is a duty that the substance, when it turned into circle from sheet, had never paid before.
13. ... Since the cirlces and the sheets, listed in the same heading, are subject to the same duty, they are immune to that duty once they have paid it under any of the forms listed there" ....
It is very clear from the above extracts that the only basis for Shri Syiem's disagreement with Shri Santhanam was that the article "circle" on which duty was sought to be recovered, was mentioned in the same tariff entry as the article "strip" in which capacity duty had already been recovered. His disagreement was not on the ground that the process was not one of manufacture, or that circles could not be charged to duty because they did not form the end-product. In other words the disagreement bet-ween the two learned Members was only on the question whether the levy of duty on the circles, which admittedly came into existence as an intermediate product, would constitute double taxation or repeat taxation and for that reason be impermissible. This is the only question which I have to consider for the purpose of the present reference.
25. Both sides had cited authorities in regard to this question. It is clearly one regarding which much could be said on both sides. However, it is not necessary to consider this question from first principles.
This is because, as was pointed out to the' learned advocate for the appellants at the outset, there is a Larger Bench decision of the Tribunal on this very question, in the case of Guardian Plasticote Ltd., Calcutta v. Collector of Central Excise, Calcutta and Ors. [1986 (24) ELT 542 (Tribunal)]. The majority judgment in that case was given by Member Shri V.T. Raghava-chari with whom Vice-President Shri G.Sankaran and Member Shri K.S. Venkataramani agreed. As seen from Shri Raghavachad's order, the case related to the classification of an article consisting of two layers of kraft paper joined together by a layer of polythene. The Bench considered that this was laminated paper.
Various arguments were advanced on behalf of the assessees to show that, having regard to the wording of the tariff entry for paper, as it was worded at the relevant time, duty would not be leviable on the laminated paper. Rejecting this argument, the majority judgment observed as follows :- "18. But none of the above arguments appears to us to be acceptable.
We have extracted earlier the several passages in the judgment of the Supreme Court" [in Empire Industries Ltd. v. Union of India, 1985 (20) ELT 179 SC] "which lay down general principles as to whether processes carried out on an already manufactured product could result in manufacture of another distinct excisable commodity.
The Supreme Court has held that such a result is possible, and permissible, and that even the fact that the new excisable commodity would also fall under the same tariff item, would not make any difference as to the liability for duty with reference to the new excisable commodity. We may in this connection refer to a later judgment of the Supreme Court in the case of Union of India v. Ahmedabad Manufacturing and Calico Mills [1985 (21) ELT 633 S.C.].
In that judgment the Supreme Court, referring to the amendment of Section 2(f) in 1980, observed - "This amendment has only attempted to explain the obvious and to put the question beyond dispute." This observation by the Supreme Court itself would support our finding that the absence of amendment to Section 2(f) with reference to T.L17 need not rule out our conclusion as to the process adopted by the appellants amounting to manufacture as defined in the Act.
xxx xxx xxx 21. As earlier seen M/s. Guardian Plasticote themselves admitted in their own writ petition that the laminated product manufactured by them was commercially distinct from kraft paper received by them or the polythene used in the process of lamination. This process of lamination made the two layers of kraft paper impervious to water and oil and the resultant product was therefore, specially suited for packing ammunition. That was why the same was being exclusively supplied to the Defence Department. Since therefore, the process of lamination, which amounted to manufacture, led to the emergence of a new and distinct commercial product, marketable as such, the conclusion is inevitable that this new product would invite imposition of duty, though there may not be any move away from tariff Item 17 or even from one sub-heading to another. The argument of Shri Gupta is that Tariff Item 17(3), as it then stood, related to packing and wrapping paper and since kraft paper was packing and wrapping paper and the laminated product was also packing and wrapping paper, there was no case made out for imposition of duty once over on the resultant product. This argument, for the reasons stated earlier, cannot be accepted." (Emphasis added).
Thus, the Tribunal had before it the very question of double taxation which has been raised in the present case, the specific question raised was whether in a case where duty-paid kraft paper (a variety of packing and wrapping paper) was used in the manufacture of laminated paper (which was also a variety of packing and wrapping paper, falling under the same tariff entry) duty could be levied once again on the resultant product. Based on the judgment of the Supreme Court in the Empire Industries case, the majority held that duty could be levied on the laminated paper, and that the appeals of the assessees should be dismissed.
26. I have not ignored the fact that the contrary view was expressed by the other Members of the Larger Bench,' namely, Vice-President Shri S.D. Jha and Member Shri H.R. Syiem. Both of them felt that the judgment of the Supreme Court in the Empire Industries case would not justify the levy of duty on the laminated paper. The observations of Member Shri Syiem in that case were similar to those recorded .by him in the present case. This would be seen from the following extract" from his order in that case :- "37. There cannot be a good reason for exacting the same duty twice over on the same commodity or product, under the law at present. The law can make every little change, every fine alteration, every new appearance, dutiable, and no one can say it is wrong. But the scheme for that is a heading/Sub-heading for every time of such duty levy, to make each one a duty attracting "manufacture"; not putting a number of products together as liable to one duty, and then clamping down tax every time a "change" takes place. Change cannot serve as the duty levying test - only a tariff heading can do that. The true qualification for a duty is not a "manufacture" or a "change" but a manufacture or change that results in entry into a head or item, a head or item that had not till then been qualified for. That is the ratio of the Supreme Court's DCM judgment on vegetable oil." 27. Thus, two of the learned Members of the Bench in the Guardian Plasticote Ltd. case expressed a view different from that of the majority. However, it was held that in view of the decision of the majority the appeals had to fail. In other words, the final decision of the Larger Bench was that the laminated paper was liable to duty as "packing and wrapping paper", although made from kraft paper which had borne duty as "packing and wrapping paper", under the same sub-item of the Central Excise tariff.
28. The above decision of the Larger Bench is squarely applicable to the present case, where the question is whether aluminium circles falling within the description of sub-item (b) of Item 27 would be liable to duty even though made from strips which had borne duty under the same item and sub-item.
29. Since the issue is covered by the decision of a Larger Bench of this Tribunal, there is hardly anything more which needs to be said.
The Larger Bench in question, as seen from the opening para of Shri Raghavachari's order, was set up because of a conflict between earlier orders of the Tribunal. The decision of the Larger Bench would therefore be the last word on the question so far as the Tribunal is concerned. This is of course subject to the qualification that if there is a judgment of the Supreme Court or a High Court subsequent to the order of the larger Bench, and to a different effect, the decision of the Larger Bench might require re-examination. But that is not the case here. On the only point which is before me, namely, the aspect of double taxation, the learned advocate of the appellants had placed reliance on the judgment of the Hon'ble Supreme Court in the case of Tata Iron & Steel Co. Ltd. (AIR 1976 SC 599). This was much before the decision of the Larger Bench of the Tribunal. There has also been brought to my notice a 1979 decision of the Hon'ble Supreme Court taking a different view, vide paras 15 and 16 above. On the plea of double taxation, the Supreme Court was emphatic: "There is nothing in Article 265 of the Constitution from which one can spin out the constitutional vice called double taxation.... If on the same subject matter the legislative chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure save where other prohibitions exist".
30. A point could be made that the decision of the Larger Bench was not unanimous, but was by a narrow majority of 3 Members to 2. While this is so, it has nevertheless to be taken as the decision of the Larger Bench. Particularly in the case of difficult or complex questions, it may well happen that even a Larger Bench may not be unanimous in its view. That does not mean that the majority view ceases to carry the weight of the Larger Bench. To mention an instance, the Hon'ble Supreme Court had to consider a Presidential Reference (Special Reference No.l of 1962, dated 19-4-1962) on the question whether Customs duties and Central Excise duties were taxes on property within the meaning of Article 289 of the Constitution of India. This was a question of very great importance, both because it involved relations between the Union of India and States and because of the very large amount of revenue involved. The occasion for the reference was that the Government of India were considering the advisability of seeking to amend the Sea Customs Act, 1878, and the Central Excises and Salt Act, 1944, to make it clear that the provisions regarding levy of Custom's duties and Excise duties on goods belonging to the Government (including the State Governments) would not be contrary to the provisions of Article 289 of the Constitution. The reference was heard by a Bench of 9 Hon'ble Judges of the Supreme Court. 5 Hon'ble Judges, including the then Chief Justice of India, Shri B.P. Sinha, held that the immunity to States in respect of Union Taxation, under Article 289(1), did not extend to duties of Customs, 4 Hon'ble Judges expressed the contrary view, namely that Article 289 precluded the Union from imposing Customs duties on the import or export of property of a State-Thus, there was a majority opinion of 5 Hon'ble Judges, and a minority opinion of 4 Hon'ble Judges. Nevertheless the reference was deemed to be answered according to the majority opinion. The proposed amendments to the Sea Customs Act (incorporated in the Customs Act, 1962) and the Central Excises and Salt Act were duly made and the relevant provisions are still very much on the statute book, without their constitutionality being challenged.
The fact that the opinion of the Hon'ble Supreme Court was on the basis of a bare majority of 5 to 4 did not in any way affect its sanctity. On the same principle, the fact that the Larger Bench decided by a majority of 3 to 2 does not take away the weight of the final decision as the decision of a Larger Bench.
31. A question might also be raised whether the decision of a Larger Bench should necessarily be accepted and followed by another Bench. It is certain'ly open to a Bench, which considers that there are strong grounds for disagreement with the decision of another Bench of equal or greater strength, to suggest reference to a Larger Bench. This principle should not however be carried to the extent of suggesting review of the decision of a Larger Bench by a still larger bench. It is not as if the Tribunal has the last word on any question. The decision of the Larger Bench in the Guardian Plasticote case was appealable to the Hon'ble Supreme Court. The decision on the present case, or on any other case where the decision of a Larger Bench on the question of excisability is followed, would also be appealable to the Supreme Court. The issue having been considered by a Larger Bench, and a view having been taken that view should, in my opinion, be followed by all Benches of the Tribunal, unless and until the law is changed or there is a specific decision to the contrary by the Supreme Court or a High Court.
32. I therefore hold, on the point of difference appearing in para 2 above, that duty can in this case be levied on the circles, even though they have been made from duty-paid strips.
33. For the reasons given in para 23 of this order, it is not necessary for me to deal with the other arguments advanced by the learned advocate for the appellants.
34. The case should now go back to the original Bench for final orders in accordance with the decision in para 32 above.
In view of the orders of the Hon'ble President on the point of difference the Appeal is dismissed.