Electrical Hardware Industries Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. the appeal no. e/1242/98 is against order-in-original no. 51/97, dated 19-12-1997 by appellants m/s. electrical hardware industries and appeal no. e/1243/98 is against order-in-original no. 46/97, dated 19-12-1997 by appellants m/s. general engineering industries.2. in both these cases, the classification of the item viz. cross arms is inter alia disputed.3. heard shri a.k.j. nambiar, learned advocate for appellants . he submits that as far as dutiability of the cross arms are concerned, this very tribunal by its final order no. 1124 & 1125/98, dated 8-6-1998 has held that the same are not dutiable as no process of manufacture under central excise act is involved. he submits that the said decision was taken in appellants' own cases. he submits that if cross arms are held as non-excisable goods, then the value of clearance of cross arms is to be excluded from the computation of total clearances for the purposes of ssi exemption notification no. 1/93 claimed by them. in that case, both the appellants would be well within the exemption limit. in view of this, there is no need to examine the dutiability of the other items at all.4. heard shri s. kannan, learned jdr who reiterates the revenue's contention.5. we have carefully considered the submissions and the records of the case. we find that this issue has already been considered and adjudicated upon in our final order no. 1124 & 1125, dated 8-6-1998 in these appellants own cases wherein it was held as follows :- "2. arguing for the appellants ld.advocate submits that the issue is no longer res-integra and it has been decided in large number of cases that cutting and punching the soles of angles, channels, etc. does not amount to manufacture. he also submits that the activity of even forming cross arms by bending angles does not bring into existence new rules. he refers to the following judgements :- (i) tata engineering and locomotive co. ltd. as reported in 1997 (89) e.l.t. 463 (bombay). in this judgement it has been held that the process of drilling and welding and fastening after cutting duty paid material purchased from market does not amount to manufacture under section 2(f) of the c.e. act, 1944. it also deals about coloumns, beams. trusses and purlins being sections or portions of a structure and coming into existence when affixed or fabricated into the structure thus, simultaneously on coming into existence become part of the structure and thus becoming immovable in character and therefore, bombay high court held that these items are not goods excisable to excise duty.tansi engineering works v. c.c.e. as reported in 1996 (88) e.l.t. 407 (tribunal) wherein the bench held that cutting and punching holes and angles, channels, etc does not amount to manufacturing as no new commodity is brought into existence. the bench also referred to the amended definition of manufacturing and also to the tariff heading 73.08 and observed that neither the section nor the chapter nor the description "specify" the process of cutting and punching of angles and channels as "amounting to manufacture".vindhya paper mills v. c.c.e. 298. in this case also it was held that mere cutting angles, other shapes and sections of steel into required sizes, drilling and punching holes, painting, welding, etc. for construction of godowns and stores not amount to manufacture.v.k. industries v. c.c.e. as reported in 1998. in this case it has been held that making curves, trestles, bend pipes, benzene coil, raw materials like angles, sheets, channels, etc.does not amount to manufacture. (v) c.c.e. v. tamil nadu electricity board workshop as reported in 1998 (75) ecr 602 (tribunal). in this case also the tribunal citing an earlier judgment of supreme court in the case of moti laminates v. c.c.e. - [1995 (76) e.l.t. 241(s.c.)] held that the process of mere drilling, bending etc does not amount to process of manufacture. the tribunal further referred to the kerala high court's judgment in the appellant's own case to hold that the observations made by the single bench was a prima facie view. 3. ld. advocate points out that the prima facie view expressed in this proceedings by single judge has been set aside by the division bench in the w.a. 813 of 1997 and 812 of 1997, dated 2-7-1997. therefore, as on date no such prima facie view of the single bench exists and hence a clear finding is required to be given that their items which came into existence are not goods. 4. ld. jdr points out that heading 73.08 specifically includes the items manufactured by them, hence they are excisable and dutiable. ld. advocte submits that this point raised by ld. dr has already been settled in the case of tansi engineering as well as in the case of supreme court judgment rendered in the case of moti laminates. he submits that both these judgments have been confirmed in the case of c.c.e. v. tamil nadu electricity board workshop. 5. on a careful consideration of the submissions, we notice that the issue has been settled by a large number of judgments as cited by ld. advocate. bombay high court judgement also in the case of tata engineering & locomotive co. ltd. deals on the same point and the points raised by ld. dr has also been dealt with in tansi engineering works and in the case of c.c.e. v. tamil nadu electricity board workshop. in view of these judgments, we hold that the commissioner was not justified in not following the ratio of these judgments. by respectfully following the above citations, we set aside the impugned order and allow the appeals." 6. since the issue of excisability and dutiability of cross arms have already been considered and decided upon in the said final order, we have to apply the ratio thereof to the question of dutiability of cross arms in the present appeals also and find that because the manufacture of said cross arms would not lead to excisability of the product in terms of our earlier orders noted above, therefore, we find that the submissions by learned advocate that the value of these should be excluded from the value of clearances of these appellants during the period in dispute needs to be looked into in detail by the original authority. the tribunal is not in a position to re-compute the value of these clearances in the absence of any records.7. we, therefore, find that the orders-in-original impugned are liable to be set aside and the matter needs to be remanded to the original authority for such recomputation. the orders-in-original impugned are, therefore, set aside and the matter is remanded to the learned commissioner who shall recompute the value of clearances under the ssi exemption notification claimed by the appellants after excluding the value of cross arms which we have held to be non-excisable . after such computation, the learned commissioner shall pass a speaking order in this respect after hearing the appellants. the appeals succeed by way of remand with the above directions.

Judgment:
1. The Appeal No. E/1242/98 is against Order-in-Original No. 51/97, dated 19-12-1997 by appellants M/s. Electrical Hardware Industries and Appeal No. E/1243/98 is against Order-in-Original No. 46/97, dated 19-12-1997 by appellants M/s. General Engineering Industries.

2. In both these cases, the classification of the item viz. Cross arms is inter alia disputed.

3. Heard Shri A.K.J. Nambiar, learned Advocate for appellants . He submits that as far as dutiability of the cross arms are concerned, this very tribunal by its Final Order No. 1124 & 1125/98, dated 8-6-1998 has held that the same are not dutiable as no process of manufacture under Central Excise Act is involved. He submits that the said decision was taken in appellants' own cases. He submits that if cross arms are held as non-excisable goods, then the value of clearance of cross arms is to be excluded from the computation of total clearances for the purposes of SSI exemption Notification No. 1/93 claimed by them. In that case, both the appellants would be well within the exemption limit. In view of this, there is no need to examine the dutiability of the other items at all.

4. Heard Shri S. Kannan, learned JDR who reiterates the Revenue's contention.

5. We have carefully considered the submissions and the records of the case. We find that this issue has already been considered and adjudicated upon in our Final Order No. 1124 & 1125, dated 8-6-1998 in these appellants own cases wherein it was held as follows :- "2. Arguing for the appellants ld.Advocate submits that the issue is no longer res-integra and it has been decided in large number of cases that cutting and punching the soles of angles, channels, etc.

does not amount to manufacture. He also submits that the activity of even forming cross arms by bending angles does not bring into existence new rules. He refers to the following judgements :- (i) Tata Engineering and Locomotive Co. Ltd. as reported in 1997 (89) E.L.T. 463 (Bombay). In this judgement it has been held that the process of drilling and welding and fastening after cutting duty paid material purchased from market does not amount to manufacture under Section 2(f) of the C.E. Act, 1944. It also deals about coloumns, beams. Trusses and Purlins being sections or portions of a structure and coming into existence when affixed or fabricated into the structure thus, simultaneously on coming into existence become part of the structure and thus becoming immovable in character and therefore, Bombay High Court held that these items are not goods excisable to excise duty.Tansi Engineering Works v. C.C.E. as reported in 1996 (88) E.L.T. 407 (Tribunal) wherein the Bench held that cutting and punching holes and angles, channels, etc does not amount to manufacturing as no new commodity is brought into existence. The Bench also referred to the amended definition of manufacturing and also to the Tariff Heading 73.08 and observed that neither the section nor the chapter nor the description "specify" the process of cutting and punching of angles and channels as "amounting to manufacture".Vindhya Paper Mills v. C.C.E. 298. In this case also it was held that mere cutting angles, other shapes and sections of steel into required sizes, drilling and punching holes, painting, welding, etc. for construction of godowns and stores not amount to manufacture.V.K. Industries v. C.C.E. as reported in 1998. In this case it has been held that making curves, trestles, bend pipes, benzene coil, raw materials like angles, sheets, channels, etc.does not amount to manufacture.

(v) C.C.E. v. Tamil Nadu Electricity Board Workshop as reported in 1998 (75) ECR 602 (Tribunal). In this case also the Tribunal citing an earlier judgment of Supreme Court in the case of Moti Laminates v. C.C.E. - [1995 (76) E.L.T. 241(S.C.)] held that the process of mere drilling, bending etc does not amount to process of manufacture. The tribunal further referred to the Kerala High Court's judgment in the appellant's own case to hold that the observations made by the Single Bench was a prima facie view.

3. Ld. Advocate points out that the prima facie view expressed in this proceedings by Single Judge has been set aside by the Division Bench in the W.A. 813 of 1997 and 812 of 1997, dated 2-7-1997.

Therefore, as on date no such prima facie view of the Single Bench exists and hence a clear finding is required to be given that their items which came into existence are not goods.

4. Ld. JDR points out that Heading 73.08 specifically includes the items manufactured by them, hence they are excisable and dutiable.

Ld. Advocte submits that this point raised by ld. DR has already been settled in the case of Tansi Engineering as well as in the case of Supreme Court judgment rendered in the case of Moti Laminates. He submits that both these judgments have been confirmed in the case of C.C.E. v. Tamil Nadu Electricity Board Workshop.

5. On a careful consideration of the submissions, we notice that the issue has been settled by a large number of judgments as cited by ld. Advocate. Bombay High Court judgement also in the case of Tata Engineering & Locomotive Co. Ltd. deals on the same point and the points raised by ld. DR has also been dealt with in Tansi Engineering Works and in the case of C.C.E. v. Tamil Nadu Electricity Board Workshop. In view of these judgments, we hold that the Commissioner was not justified in not following the ratio of these judgments. By respectfully following the above citations, we set aside the impugned order and allow the appeals." 6. Since the issue of excisability and dutiability of cross arms have already been considered and decided upon in the said final order, we have to apply the ratio thereof to the question of dutiability of cross arms in the present appeals also and find that because the manufacture of said cross arms would not lead to excisability of the product in terms of our earlier orders noted above, therefore, we find that the submissions by learned Advocate that the value of these should be excluded from the value of clearances of these appellants during the period in dispute needs to be looked into in detail by the original authority. The Tribunal is not in a position to re-compute the value of these clearances in the absence of any records.

7. We, therefore, find that the Orders-in-Original impugned are liable to be set aside and the matter needs to be remanded to the original authority for such recomputation. The Orders-in-Original impugned are, therefore, set aside and the matter is remanded to the learned Commissioner who shall recompute the value of clearances under the SSI Exemption Notification claimed by the appellants after excluding the value of cross arms which we have held to be non-excisable . After such computation, the learned Commissioner shall pass a speaking order in this respect after hearing the appellants. The appeals succeed by way of remand with the above directions.