Full Judgment
2. Duties have been confirmed and penalties imposed upon various persons on the ground that they are engaged in the activity of decoiling, straightening and cutting Rebar Coils obtained from the manufacturers of the same, into Rebar bars and clearing the same without payment of duty of excise and without observing other excise formalities. The Revenue's contention is that such activity undertaken by the appellant amounts to manufacture and such bars obtained from the coils are classifiable as 'other Bars and Non Alloy Steel' falling under chapter sub heading No. 7214.90 of the Central Excise Tariff Act, 1985.
25. Thus, I observe that the case is essentially involving about the issue involved in this case whether the activities i.e. decoiling, straightening and cutting of Rebur Coils falling under chapter sub-heading No. 7213.90 undertaken to produce TMT Rebar Rods/Bars falling under chapter subheading No. 7214.90 by M/s. Maruti on job work basis are covered within the ambit of manufacturing activities under the Central Excise Act; 1944.
28(iii) Further, it is quite clear that a new commodity (Rebar Bars-falling under chapter sub-heading No. 7214.90) have come into existence from its raw material (Rebar Coils falling under chapter sub-heading No. 7213.90). Thus, a new, different, article emerges having its own distinctive name, character and usage; and such bars in running length are useful for a particular use like in construction etc. whereas the coils are understood to be goods would in spiral or circular form and which cannot be substituted for use as Rebar Bars. Rebar Coils and Rebar Bars are thus two different articles having different subheadings and usage and are thereby known to the market accordingly. Thus, M/s. Maruti have manufactured Rebar Bars form Rebar coils.Lal Woolen and Silk Mills (P) Ltd. v. Collector of Central Excise, Chandigarh , the Hon'ble Supreme Court has clearly held that: 'Conversion of gray wooden yarn into dyed woolen yarn amounted to manufacture fact that gray yarn and dyed yarn were covered by two separate tariff entries with different rate of duty, itself recognized them as two different goods with separate levy-Section 2(E) of Central Excise Act, 1944" As the Hon'ble Supreme Court vide above mentioned judgment, clarified the fact that one product converted in other product and if they fall under different tariff headings then the said process is to be treated as manufacturing process.
30(ii) Incidentally Nagpur Commissionerate's Trade Notice No. 545/55/2001 dated 9.10.2001 issued under F. No. V-CH(72) 8-1/99/T and CBEC, New Delhi's Circular dated 584/21/2001 -CX dated 7.9.2001 had clarified that-"a process will amount to manufacture if the resultant product is classifiable under different sub-headings of the Central Excise Tariff than that of the inputs. From the foregoing, I conclude that M/s. Maruti are actually engaged in the manufacture of 'Rebar Bars' falling under Chapter sub-heading 7213.90 by decoiling, straightening and cutting.
As is clear from the above reproduced paragraph from the Commissioner's order, reference has been made to and reliance is placed upon the Board's circular No. 584/21/2001-CX dated 7.9.2001 as also upon the Hon'ble Supreme court's decision in the case of M/s. Lal Woollen and Silk Mills (P) Ltd. 4. It is seen that the said circular of the Board was challenged before the Delhi High Court by way of a Writ Petition. The Hon'ble Tribunal in their judgment reported as Faridabad Iron and Steel Traders Association v. UOI 2004 (178) ELT 1099 (Del.) has held that the process of cutting or slitting of steel sheets in coil form to specific sizes does not amounts to 'manufacture'. As a result of the finding, the Hon'ble High Court set aside the Boards Circular No. 584/21/2001-CX dated 7.9.2001.
For better appreciation of the said decision, we reproduce the relevant paragraphs: 86. Reverting to the facts of the case, Steel coil is basically sheet in running length. When it is produced by the manufacturer's at their end and when it is folded for the case of transportation, it has been named as coil but when it is unfolded either at the manufacturers' end or at any other end it remains as sheet. The sheets in running length cannot be brought to the destination without folding it and when it is folded by the manufacturer, it is sheet in coil form and unfolded it is sheet as such and accordingly there is no difference in the steel sheet in coil form and cut straight to the specific sizes. The coils in running length are produced to save transportation cost and to minimize the wastage as during the cutting of the steel coils.
90. While examining justifiability of Excise Duty we much clearly comprehend that Excise Duty can be imposed on the manufacture of goods produced in India and that also on the bringing into existence as new substances known to the market. In view of the settled position of law crystallized by the aforesaid judgment, we have no difficulty in clearly arriving at the conclusion that mere cutting or slitting of steel sheets does not amount to manufacture because the identity of the product remains unchanged. The steel folded in coil remains steel even after cutting. No new, different and distinct article emerges having distinct name, character and use.
Therefore, mere cutting and slitting would not amount to manufacture. We are also clearly of the view that merely because of change in tariff item, the goods does not become excisable. On the application aforesaid test, our conclusion is clear that the impugned circular dated 7.9.2001 is wholly unsustainable and has to be quashed and we order accordingly.
91. The impugned Circular was issued by the executive and sent to all Chief Commissioners of Central Excise, all Director General of Central Excise, all Commissioners of Central Excise (Appeals) and all Commissioners of Central Excise. Some of these bodies discharge quasi judicial functions. It is the settled position of law that quasi judicial functions cannot be controlled by executive actions by issuing circulars. It is totally impermissible. According to the spirit of Section 37B circulars or directions can be issued in order to achieve the object of uniformity and to avoid discrimination.
Such circulars bind the officers only when they act in their administrative capacity. It must be clearly understood that the Board's circulars instructions or directions cannot in any manner interfere with quasi judicial powers of the Assessing Officers.
Officials exercising quasi judicial powers must ignore any circular or direction interfering with their quasi judicial functions.
97. Consequently, the impugned circular dated 7.9.2001 issued by the Ministry of Finance, Department of Revenue, Central Board of Excise & Customs is quashed and proceedings emanating from the said circular also stand quashed. These writ petitions are accordingly allowed. In the facts of the case, we direct the parties to bear their own costs.
5. The facts of the above case is identical to the present appeals before us. Coiling of the bars was being done at the manufacturer's end for the facility of the transportation. At the trader's end, the same were being decoiled for the purpose of use by straightening and cutting the same. The Hon'ble High Court after considering the various decisions on the point including the Hon'ble Supreme Court decision in the case of Lal Woolen Mills has held that such activities would not amount to manufacture and has quashed the Board's circular.
6. Inasmuch as the issue stands finally decided by the above referred decision of Delhi Court, we set aside the impugned orders and allow the appeals with consequential relief to the appellant.