Cce Vs. Tamil Nadu Electricity Board - Court Judgment

Excerpt:
1. this revenue appeal and cross objection arises from order-in-appeal dt. 23.2.1990 passed by collector (appeals), madras confirming the order-in-original holding 10 of the items noted below as not excisable as no new goods come into existence. the revenue in this appeal contends that all these 10 items which have arisen out of the various raw materials like channels, angles and plates have undergone curing, drilling, bending etc. and it is known separately as a new commodity in the market and therefore, they are required to be treated as new goods and hence they are dutiable. in this regard the ratio of the hon'ble supreme court judgment rendered in the case of mis. dcm as reported in 1977 elt j 199 : 1973 april cen-cus 56 (sc) : ecr c 216 sc is relied for classifying the items under sub-heading 7308.90 and the judgment of the hon'ble supreme court rendered in the case of empire industries ltd. v. uoi as reported in 1988 (20) elt 179 : 1985 ecr 1169 (sc) : ecr c 797 sc. the collector (appeals) has held that the product is excisable after 1.3.1988 in view of the specific mention in tariff item and that there is no mention in tariff item prior to 1.3.1988, therefore, he held that it cannot be held as new goods for classification purpose under the said tariff items.2. we have heard both sides in this case. ld. dr strongly urged the revenue points raised in the appeal memo and submits that the item is no longer angles or channels but they have assumed a new character after the assessee has carried out several processes. they have assumed a new name and have specific use and therefore, they are required to be treated as goods for the purpose of classification. it is his further submission that the item falling under the same tariff heading is not a criteria for not treating them for classification and excisability purpose in view of the hon'ble supreme court judgment rendered in the case of laminated packaging (p) ltd. v. collector of central excise as . in this regard, he has also relied onsrinivasa metal industries v. collector of central excise, guntur as . he also brought to the notice of the bench the hon'ble kerala high court judgment rendered in the case of electrical & hardware industries v. union of india as .3. countering the arguments of id. dr., id. advocate submits that the hon'ble kerala high court has not laid down any conclusive ratio on the aspect of manufacture and arising of new goods for the purpose of classification. he pointed out from para 5 of the judgment that the assessee had challenged the proceedings on the issue of show cause notice. the hon'ble kerala high court had expressed only a prima-facie view and has held that the matter can be adjudicated further and in that context dismissed the writ petition, leaving the matter for a decision for the authorities. while arriving at such a judgment, the high court had on an occasion to examine all the case law on the aspect. he pointed out that the conclusive judgment had been arrived at by the tribunal in the case of tansi engineering works v. commissioner of central excise, coimbatore has examined all aspects in the matter including the definition of manufacture appearing in section 2(f) of the central excise act, 1944 besides examining the supreme court judgments and various other judgments of the tribunal on the same issue to hold that the activity of cutting and punching of angles and channels does not bring into existence a new article for the purpose of excisability and dutiability.4. on a careful consideration of the submissions made by both the sides, we find that the following items and the process undertaken, had come up for consideration before the lower authorities and same is noted herein below: (i) transfer structural materials: here the channels and angles are just cut and holes are drilled. (ii) lt-3 phase channel cores arm: here the channels are cut to various sizes and holes are drilled. (iii) stay clamp ordinary: here the plates are cut and bent into clamps manually and then holes are provided. (iv) back clamp ordinary: here also the plates are cut and bent into shapes and then holes are drilled. (v) lt strap set without belt and nut: the gi plate is cut by hand and holes are provided. (vi) stay clamp special: here too, the plates are cut and shaped into holes on either side of the bent portion. (viii) lt single phase channel cross arc: here also the channels are cut and holes are drilled. (ix) earth pipe: the gi pipe is flattened at one end and holes are drilled, (x) street light fixtures: the gi pipe is cut and bend.as can be seen from the above items and the activity carried out therein, we notice that the process of cutting and drilling of holes is carried on these items whether amounting to manufacture came up for consideration in the case of tansi engineering works. the activity carried out was cutting and punching of holes in angles and channels.the tribunal after detailed consideration has held that such activity does not amount to a process of 'manufacture' and in this regard also applied the ratio of the hon'ble supreme court judgment rendered in the case of moti laminates as reported in 1995 (76) elt 241 : 1995 (57) ecr 1 (sc). the tribunal has also taken into consideration the earlier judgments of the tribunal which are noted herein below:r.s. steel works v. cce this judgment of the tribunal has been followed by the tribunal in the case of sae (india) ltd. v. collector of central excise, indore as . we notice from the judgment of the hon'ble kerala high court that the assessee had challenged the commencement of proceedings by filing a writ petition and high court has taken into consideration the submissions made by the revenue and has only expressed a prima facie view, as can be noticed from para 9 of the judgment which is noted below: ...in this case the excise authorities have stated clearly and the matter being at the adjudicating stage, prima facie i am satisfied that the manufactured materials are excisable goods and they have jurisdiction to assess it as such. it is for the petitioners to establish the case before the adjudicating authorities otherwise.therefore, the high court after noting the case law on this aspect rejected the writ petition. as can be seen from this judgment, the high court has expressed only a prima-facie view and had left it to the petitioner to establish their case before the adjudicating authorities.in the judgment of the tribunal, the authorities had adjudicated the issue and the tribunal has considered all the points in the light of the judgment of hon'ble supreme court with regard to the "excisability" and the terms "goods". therefore, we are inclined to follow the judgments rendered by the tribunal in the cases cited above and in that view of the matter, we do not find any merits in the appeal and the same is rejected. the cross objections are in the nature of arguments and hence no separate order is required on the cross objection.

Judgment:
1. This revenue appeal and cross objection arises from order-in-appeal dt. 23.2.1990 passed by Collector (Appeals), Madras confirming the order-in-original holding 10 of the items noted below as not excisable as no new goods come into existence. The revenue in this appeal contends that all these 10 items which have arisen out of the various raw materials like channels, angles and plates have undergone curing, drilling, bending etc. and it is known separately as a new commodity in the market and therefore, they are required to be treated as new goods and hence they are dutiable. In this regard the ratio of the Hon'ble Supreme Court judgment rendered in the case of Mis. DCM as reported in 1977 ELT J 199 : 1973 April Cen-Cus 56 (SC) : ECR C 216 SC is relied for classifying the items under sub-heading 7308.90 and the judgment of the Hon'ble Supreme Court rendered in the case of Empire Industries Ltd. v. UOI as reported in 1988 (20) ELT 179 : 1985 ECR 1169 (SC) : ECR C 797 SC. The Collector (Appeals) has held that the product is excisable after 1.3.1988 in view of the specific mention in tariff item and that there is no mention in tariff item prior to 1.3.1988, therefore, he held that it cannot be held as new goods for classification purpose under the said tariff items.

2. We have heard both sides in this case. Ld. DR strongly urged the revenue points raised in the appeal memo and submits that the item is no longer angles or channels but they have assumed a new character after the assessee has carried out several processes. They have assumed a new name and have specific use and therefore, they are required to be treated as goods for the purpose of classification. It is his further submission that the item falling under the same tariff heading is not a criteria for not treating them for classification and excisability purpose in view of the Hon'ble Supreme Court judgment rendered in the case of Laminated Packaging (P) Ltd. v. Collector of Central Excise as . In this regard, he has also relied onSrinivasa Metal Industries v. Collector of Central Excise, Guntur as . He also brought to the notice of the Bench the Hon'ble Kerala High Court judgment rendered in the case of Electrical & Hardware Industries v. Union of India as .

3. Countering the arguments of Id. DR., Id. Advocate submits that the Hon'ble Kerala High Court has not laid down any conclusive ratio on the aspect of manufacture and arising of new goods for the purpose of classification. He pointed out from para 5 of the judgment that the assessee had challenged the proceedings on the issue of show cause notice. The Hon'ble Kerala High Court had expressed only a prima-facie view and has held that the matter can be adjudicated further and in that context dismissed the writ petition, leaving the matter for a decision for the authorities. While arriving at such a judgment, the High Court had on an occasion to examine all the case law on the aspect. He pointed out that the conclusive judgment had been arrived at by the Tribunal in the case of Tansi Engineering Works v. Commissioner of Central Excise, Coimbatore has examined all aspects in the matter including the definition of manufacture appearing in Section 2(f) of the Central Excise Act, 1944 besides examining the Supreme Court judgments and various other judgments of the Tribunal on the same issue to hold that the activity of cutting and punching of angles and channels does not bring into existence a new article for the purpose of excisability and dutiability.

4. On a careful consideration of the submissions made by both the sides, we find that the following items and the process undertaken, had come up for consideration before the lower authorities and same is noted herein below: (i) Transfer structural materials: Here the channels and angles are just cut and holes are drilled.

(ii) LT-3 phase channel cores arm: Here the channels are cut to various sizes and holes are drilled.

(iii) Stay clamp ordinary: Here the plates are cut and bent into clamps manually and then holes are provided.

(iv) Back clamp ordinary: Here also the plates are cut and bent into shapes and then holes are drilled.

(v) LT strap set without belt and nut: The GI plate is cut by hand and holes are provided.

(vi) Stay clamp special: Here too, the plates are cut and shaped into holes on either side of the bent portion.

(viii) LT single phase channel cross arc: Here also the channels are cut and holes are drilled.

(ix) Earth pipe: The GI pipe is flattened at one end and holes are drilled, (x) Street light fixtures: The GI pipe is cut and bend.

As can be seen from the above items and the activity carried out therein, we notice that the process of cutting and drilling of holes is carried on these items whether amounting to manufacture came up for consideration in the case of Tansi Engineering Works. The activity carried out was cutting and punching of holes in angles and channels.

The Tribunal after detailed consideration has held that such activity does not amount to a process of 'Manufacture' and in this regard also applied the ratio of the Hon'ble Supreme Court judgment rendered in the case of Moti Laminates as reported in 1995 (76) ELT 241 : 1995 (57) ECR 1 (SC). The Tribunal has also taken into consideration the earlier judgments of the Tribunal which are noted herein below:R.S. Steel Works v. CCE This judgment of the Tribunal has been followed by the Tribunal in the case of SAE (India) Ltd. v. Collector of Central Excise, Indore as . We notice from the judgment of the Hon'ble Kerala High Court that the assessee had challenged the commencement of proceedings by filing a writ petition and High Court has taken into consideration the submissions made by the revenue and has only expressed a prima facie view, as can be noticed from para 9 of the judgment which is noted below: ...In this case the Excise Authorities have stated clearly and the matter being at the adjudicating stage, prima facie I am satisfied that the manufactured materials are excisable goods and they have jurisdiction to assess it as such. It is for the petitioners to establish the case before the adjudicating authorities otherwise.

Therefore, the High Court after noting the case law on this aspect rejected the writ petition. As can be seen from this judgment, the High Court has expressed only a prima-facie view and had left it to the petitioner to establish their case before the adjudicating authorities.

In the judgment of the Tribunal, the authorities had adjudicated the issue and the Tribunal has considered all the points in the light of the judgment of Hon'ble Supreme Court with regard to the "excisability" and the terms "goods". Therefore, we are inclined to follow the judgments rendered by the Tribunal in the cases cited above and in that view of the matter, we do not find any merits in the appeal and the same is rejected. The cross objections are in the nature of arguments and hence no separate order is required on the cross objection.