ORDER
Lajja Ram, Member (T)
1. These are two appeals filed by M/s. Adarsh Metal Indus, Bombay (hereinafter referred to as ‘M/s. Adarsh’) being aggrieved with the Order-in-Appeal dated 22-1-1987, passed by the Collector of Central Excise (Appeals), Bombay. The Appeal No. E/620/87-B1 was filed in time on 11-3-1987. As the Collector of Central Excise (Appeals) had disposed of two appeals by his common order dated 22-1-1987, M/s. Adarsh were required to file two separate appeals in the matter. They filed a supplementary appeal which was received in the Registry on 7-8-1996. Along with the supplementary appeal, an application for condonation of delay (COD) was also filed. As the main appeal was filed in time, after hearing Shri R. Sudhinder, Advocate, for the appellants, and Shri P.K. Jain, SDR, for the respondents/Revenue, we condone the delay in filing the supplementary appeal.
2. As both the appeals arise out of a common order-in-appeal, they were heard together and are being disposed of by this common order.
3. The matter relates to the central excise duty liability in respect of the copper rods and copper flats /bars. These copper rods and copper flats/bars were obtained after the duty paid hot rolled copper rods and exempted flats/bars had been subjected to the process of drawing through cold rolled process. The copper rods received by the appellants had discharged duty-liability under Notification No. 174/84-CE, dated 1-8-1984, and similarly copper flats/bars had availed of duty exemption under the said Notification No. 174/84-C.E. Both the copper rods and copper flat/bars were classifiable under sub-item (3)(i) of Item No. 26A of the erstwhile Central Excise Tariff, before they were received by M/s. Adarsh, and continued to remain so classifiable when after drawing they were ready for clearance from the premises of the appellants. M/s. Adarsh had pleaded that the process adopted by them was not a process of manufacture as no new product having distinct name or character had arisen after the process of cold rolling/drawing. The Asstt. Collector of Central Excise, Bombay, who adjudicated the matter was of the view that the drawing of hot rolled rods and flats/bars into cold rolled rods and cold rolled flats/bars respectively of small dimensions and the cutting of those into required sizes was a process of manufacture as envisaged under Section 2(f) of the Central Excises & Salt Act, 1944 (hereinafter referred to as the ‘Act’). The Collector of Central Excise (Appeals), Bombay, had confirmed the order passed by the Asstt. Collector of Central Excise, Bombay.
4. The matter was heard on 10-10-1996, when Shri R. Sudhinder, Advocate, appearing for the appellants stated that they were engaged only in the reduction of size, thickness and dimension of the rods, bars and flats, and cutting them into required length and that no new product had emerged and as the duty liability had already been discharged under the applicable exemption Notification No. 174/84-C.E. by their inputs, no further Excise duty could be charged on the products obtained by them after drawing, cutting etc. The goods received and the goods cleared remained the same.
5. In reply, Shri P.K. Jain, SDR, stated that the cold rolling was a distinct process and separate duty was leviable after the hot rolled products are subjected to the process of cold rolling. It was his view that the products obtained after the cold rolling were distinct products having different character and use.
6. We have carefully considered the matter. The copper rods and the copper flats/bars received by M/s. Adarsh were classifiable under sub-item (3)(i) of Item No. 26A of the erstwhile Central Excise Tariff. After they were subjected to the process of drawing/cutting etc. they continued to remain the copper rods and the copper flats /bars, to be classified under the same sub-item (3)(i) of Item No. 26A of the Tariff. Sub-item (3) of Item No. 26A covered the following goods:
(3) Wrought bars, rods (including wire rods), angles, shapes and sections of copper:
(i) Wrought bars and rods (including wire rods) of copper,
(ii) Wrought angles, shapes and sections of copper.
Sub-item (6) of Item No. 26A covered the wrought plates, sheets, blanks (including circles) and strips of copper.
In the Explanation under the said Tariff Entry, wrought bars and rods (including wire rods) were explained as under:
(a) any extruded, rolled, drawn or forged products of solid section, of which the width or the maximum cross-sectional dimension exceeds 6 millimetres and which, if they are flat, have a thickness exceeding one tenth of the width; or
(b) any cast or sintered products, of the same forms and dimensions, which have been subsequently worked after production (otherwise than by simple trimming or descaling), provided that they have not thereby assumed the character of any article or product falling under any other item.
7. Under Notification No. 174/84-C.E., dated 1-8-1984, the specific goods falling under Item No. 26A of the Tariff, made from duty paid coppe and products thereof, falling under the same Item No. 26A, were exempte from the duty as was in excess of the amount calculated at the rate specified i the Table annexed to that notification. Notification No. 174/84-C.E., date 1-8-1984 is extracted below :
In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in column (3) of the Table hereto annexed and falling under the sub-items specified in the corresponding entry in column (2) of the said Table of Item No. 26A of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon under the said Act at the rate specified in the said First Schedule, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table.
TABLE
S. Sub-item Description of goods Rate of duty
No. No.
(1) (2) (3) (4)
1. (1), (3)(i) Unwrought copper in any form Nil
and (4) refined or not, including blister
copper and cement copper),
including ingots, notched bars,
wire bars, blocks, stabs, billets,
shots, pellets, cathodes and cakes;
wrought bars; castings not
otherwise specified.
2. (3)(i) Rods (including wire rods), -
(i) of brass Nil
(ii) other than of brass Rs. 1,300/- per
metric tonne.
3. (6) Sheets and circles produced in a Rs. 600/-per metric
rolling mill and cleared therefrom tonne.
in an untrimmed condition.
4. (6) and (7) Wrought plates, sheets, blanks Rs. 700/- per metric
(including circles), strips and foils tonne :
of copper.
Provided that the said goods are made from copper and products thereof hereinafter referred to as “inputs”, falling under the said Item 26A and on which the duty of excise leviable under the said Act or the additional duty leviable under the Customs Tariff Act, 1975 (51 of 1975), as the case may be, has already been paid :
Provided further that no credit of the duty paid on the said inputs has been taken under Rule 56A of the said Rules :
Provided also that nothing contained in this notification shall apply to copper and products thereof produced or manufactured by a primary producer.
Explanation. — For the purposes of this notification, –
(1) the expression “primary producer” means any person licensed or registered under the Industries (Development and Regulation) Act, 1951 (65 of 1951), who produces copper from copper ore.
(2) all stocks of inputs in the country except such stocks as are clearly recognisable as being non-duty paid, shall be deemed to be inputs on which the duty has already been paid.
[Notification No. 174/34-C.E., dated 1-8-1984.]
8. With effect from 1-8-1984, the copper rods received by M/s Adarsh were classifiable in the hands of their suppliers under sub-item (3)(i) of Item No. 26A and the concessional rate of central excise duty of Rs. 1,300/- per M.T. under exemption Notification No. 174/84-C.E. had been paid in respect of such copper rods. The flats/bars received from outside were also classifiable under sub-item (3)(i) of Item No. 26A, but they were charged to nil rate of duty under SI. No. I of the Table annexed to that Notification No. 174/84-C.E. The Asstt. Collector of Central Excise, Bombay, who had adjudicated the matter had observed that after 1-8-1984 the gate passes of M/s. Navyug Steel Indus, showed that the copper rods received by the appellants had been classified under Item No. 26A(3)(i) and had discharged the duty at the rate of Rs 1,300/ per M.T. under Notification No. 174/84-C.E., dated 1-8-1984. Similarly, flats /bars received by the appellants had been classified under Item No. 26A(3)(i) and were charged to nil rate of duty under said Notification No. 174/84-C.E. In his order-in-original, he had observed as under :
“After 1-8-1984 the gate passes of M/s. Navyug Steel Indus, show that the copper rods received by the present co. have been classified under Tariff Item 26A(3)(i) and have discharged duty at the rate of Rs 1,300/ per M.T. under Notification No. 174/84, dated 1-8-1984. M/s Adarsh Metal Industries are reducing the cross-sectional area of the copper rods and copper wire rods received by them by a process of drawing and then cutting the same into required sizes.
Similarly, the company has been receiving flats /bars from M/s. Navyug Steel Indus, and other rolling mills and the gate passes show that such flats have been classified under Tarif Item 26A(l)and discharged nil duty under Notification No. 119/66. From 1-8-1984 onwards the gate passes under which the said flats/bars are received by the present company show that the same has been classified under Tariff Item 26A(3)(i) and charged at nil rate of duty under Notification No. 174/84, dated 1-8-1984.”
9. The duty chargeable was specific on the basis of the weight. The rods, flats /bars received from outside Underwent processes of drawing, cutting etc. The duty on copper rods had been demanded again on the same rate of Rs. 1,300/ per M.T. under the same Notification No. 174/84-C.E. on the ground that they have been manufactured out of duty paid inputs falling under Item No. 26A. The adjudicating authority had observed as under :
“A close look at the tariff description in respect of wrought bars and rods shows that there is a clear cut distinction between a rolled bar and a drawn bar and a rolled rod and a drawn rod. The present tariff distinguishes a hot rolled rod from a cold drawn rod and a hot rolled flat/bar from a cold drawn flat/bar. I am, therefore, of the view that further drawing of hot rolled duty paid rods and flats amounts to manufacture and are therefore chargeable to duty at the appropriate rate after 1-8:1984. The NotificationNo. 174/84, dated 1-8-1984 till its amendment vide notification dated 17-3-1985, however, exempts all wrought bar from Central Excise duty provided they are made from inputs falling under T.I. 26A on which the duty of excise have already been paid. Therefore, the wrought bars manufactured by the company would not be liable to further duty having been manufactured from duty paid inputs till the amendment of Notification No. 174/84, dated 1-8-1984 by Notification No. 76/85, dated 17-3-1985.”
10. There is no finding that any new goods had been manufactured and whether the goods received and the goods under consideration were not the same goods and that new goods had emerged. The Collector of Central Excise (Appeals) in his order had referred as under :
“On the basis of the above tariff description there is a clear cut distinction between ‘a rolled bar and a drawn bar’ and ‘a rolled rod and a drawn rod’ and the present tariff distinguishes ‘a hot rolled rod from a cold drawn rod’ and ‘a hot rolled flat/bar from a cold drawn flat/bars. In these circumstances, the Asstt. Collector had correctly held that further drawing of hot rolled duty paid rods and flats amounts to manufacture and therefore they are chargeable to duty after 1-8-1984. I fully agree with the Asstt. Collector’s views. The appellants have inter alia contended that they reduce the diameter and thickness of the rods received by them by a process of drawing and, thereafter, cutting into required length and as such the said process does not amount to manufacture. I do not agree with their contention in view of the revised tariff description of Tariff Item 26A with effect from 1-8-1984, and the Asstt. Collector has fully discussed the issue regarding classification of their products both prior to 1-8-1984 and after 1-8-1984 in his order, and has rightly arrived at a decision that with the amendment of Tariff Item No. 26A with effect from 1-8-1984, further drawing of ‘hot rolled copper rods and flats/bars’ is a process of manufacture chargeable to duty under Notification No. 174/84 dated 1-8-1984 ‘as amended. In the circumstances, their Appeal No. 882/85 against the order dated 10-6-1985, fails on merits as a result of which their second Appeal No. 1530/85 against the subsequent order dated 23-8-1985 also fails.”
11. We find that in the Notification No. 174/84-C.E., there is no such distinction between hot rolled or cold rolled rods or flats/bars.
12. Whether by a certain process a new product comes into being or not is a question of fact. The term ‘manufacture’ is explained in Corpus Juris Secundum, Volume 55, at page 685, as follows :
“In order to constitute manufacturing, the original material must undergo a transformation so that a new and different article or product emerges; but what constitutes a new and different article is a question which has caused considerable difficulty in the courts.
In determining whether an article is or is not a manufacture, or whether a process or operation is or is not manufacturing, one of the important factors is the extent of the change that has been effected in the original material, since, while every change in an article is the result of treatment, labour and manipulation, every change is not manufacture; something more is necessary, and the application of labour must be carried out to such an extent that the article surfers a species of transformation and a new and different article emerges. This characteristic has been the subject of considerable discussion, and the courts have experienced some difficulty in determining what constitutes a new and different article.”
In the case before us, the process undertaken was the process of drawing for reduction of the cross-sectional area/thickness of the rods, flats and bars. The goods remained classifiable under the same sub-item /item of the Tariff and were not known commercially and in trade parlance as a different, distinct or new products.
13. In the case of Navsari Processing Indus, v. Collector of Central Excise, Baroda -1996 (85) EX.T. 386 (Tribunal), the Tribunal had held that reducing the dimension or guage of the wire rod is not a process of manufacture as it does not result in emerging a new commodity.
14. In the case of Srinivasn Metal Industries v. Collector of Central Excise, Guntur -1987 (30) E.L.T. 578 (Tribunal), the appellants were cutting the circles from duty paid aluminium strip. They pleaded that since the circles and strips fall in the same sub-item, no duty was leviable on the circles. The Tribunal held that a new and distinct commercial product emerging from, manufacture was exigible to duty, even if they fall within the same Tariff Item or sub-heading and that aluminium circles made from duty paid aluminium strips were exigible to duty. In the matter before us, there is no finding that a new and distinct commercial product had emerged from the processes to which the goods received by the appellants were subjected to. The matter had been decided only on the ground that the processes to which the goods received by the appellants were subjected to were the process of manufacture. In a matter of this nature, in our view, whether a particular process amounts to the process of manufacture or not, for the purposes of excise levy, the matter had to be seen also with reference to the resultant product. On this criteria, we do not consider that the levy of central excise duty again in terms of the same serial number of the Table annexed to the same exemption notification under which the goods had been earlier received by the appellants after discharging their duty liability under the same serial number of the Table annexed to the same exemption notification, under which the duty was sought to be demanded again, was justified.
15. In the case of Decorative Laminates (India) Pvt. Ltd. v. Collector of Central Excise, Bangalore – 1996 (86) E.L.T. 186 (SC), the Supreme Court had ruled that in determining whether processing amounts to manufacture, the criteria like (i) to what extent the value is added and (ii) whether the product is prepared for a separate use, are relevant. We do not find any finding of the lower authorities on these criteria.
16. In view of the above discussion, we do not agree with the view taken by the learned Collector of Central Excise (Appeals), Bombay, in these cases, and taking all the relevant considerations into account, both these appeals are allowed.
