Full Judgment
Pendse, J.
1. By this petition filed under Article 226 of the constitution of India, the petitioners are challenging the legality or order dated December 17, 1983 passed by Collector of Central Excise, Bombay-11, holding that the petitioners are liable to pay any excise duty in respect of manufacture of 'Hot Mix Asphalt' and the duty leviable is Rs. 2,52,325.73 for manufacture of quantity valued at Rs. 45,82,706.80 between the period commencing from June 18, 1977 and ending with September 24, 1979. The impugned order is unsustainable and only few facts are required to be stated to appreciate the grievance of the petitioners.
2. The petitioners are a partnership firm carrying on business of road contractors. For the road construction activities, the petitioners installed two Asphalt Mix Plants, one at Andheri and another at Turbhe. In the said asphalt plants, asphalt mix is prepared and which is required for the purpose of construction or road. The asphalt mix is not sold in the market and is merely used for captive consumption. The process of preparing asphalt mix is small stones along with bitumen are dries up and heated to about 150 degree centigrade in the mixing box. The mixing box is constantly rotating so that the small stones are coated with a fine paste of bitumen. This mixture is then directly released in a truck called dumper, which is taken on the road site. The dumper then empties the asphalt mix in a paver on the road site which spreads the mix on the road in an even manner like a carpet.
A show cause notice was issued to the petitioners to explain why action should not be taken for contravention of the provisions of the Central Excise Rules. The Grave man of the charge was that the petitioners carried manufacturing work without obtaining the requisite licences and failed to pay the excise duty in respect of manufacture of asphalt mix. The petitioners appeared before the Authority and explained that the process of preparation of asphalt mix does not amount to manufacture and it is so held by the Collector of Central Excise (Appeals) Bombay in the case of the petitioners by order dated September 23, 1980. In spite of the previous order, the Collector of Central Excise proceeded to hold that the process of .......... and this order is under challenge.
3. Shri Vaidya, learned Counsel appearing on behalf of the petitioners, submitted that the impugned order is entirely unsustainable and we are in agreement with this submission. Shri Vaidya invited our attention to the earlier order dated September 23, 1980 passed by the Collector of Central Excise (Appeals) where it was held that the asphalt mix is not goods liable to excise duty. The impugned order recites that the earlier order is not correct. We fail to appreciate how it is permissible for the subsequent Collector to sit in appeal over the order passed by his predecessor. Apart from this consideration, we are unable to accede to the conclusion that the process of preparation of asphalt mix amounts to manufacture as contemplated by Section 2(f) of the Central Excise Act. We have set out the process undertaken by the petitioners and we are not prepared to uphold the view of the Collector that the Company is manufacturing goods falling under Tariff Item No. 68 of Central Excise Tariff. In our judgment, the impugned order is entirely erroneous and is required to be set aside.
4. Accordingly, rule is made absolute and the impugned order dated December 17, 1983 passed by the Collector, Central Excise, Bombay-11 and copy of which is annexed as Ex. 'F' to the petition is quashed. The petitioners are not liable to pay excise duty in respect of process of preparation of asphalt mix. In the circumstances of the case, there will be no order as to costs.