ORDER
G.A. Brahma Deva, Member (J)
1. The main issue involved in these cases is whether refilling of old and used calender bowl amounts to manufacture or not for the purpose of levy of excise duty.
2. Since different Collectors (Appeals) have taken different view on the issue for the different periods as per their respective orders, the party and department have filed the appeals against the said orders feeling aggrieved and the cross-objections were also filed by both sides in the concerned appeals. Hence, all these matters are clubbed together and are being disposed of by this common order.
3. M/s. Eck Haubold and Laxmi Limited are manufacturers of ‘calender bowls’ falling under tariff item 68 which are used in the textile and paper Industry for calendering, pressing, smoothening the surface of fabrics or paper. They are also engaged in the activity of refilling of old calender bowls on job basis. Old shaft is supplied by the customer which is then returned to the said customer after being refilled on recovery of refilling charges. It was also the case of the party that at times, other raw materials namely asbestos, paper, woolpaper, denim paper are also supplied by the customer along with the old shaft.
4. We have heard Dr. P.V. Jois, learned Advocate for the party and the Department was duly represented by Shri M.S. Arora, learned J.D.R. in these cases.
5. Dr. P.V. Jois submitted that there is no dispute with reference to manufacturing activity of calender bowls as duty was duly paid in respect of the same, but dispute rests with activity of refilling of old calender bowls on job basis. He said that refilling of calender bowls is achieved by repairing worn out portion or refilling the same with hard waste. The used and old bowls received by them are duty paid. The bowls which are received for servicing, repairing, refilling etc. continue to remain and understood and recognised as bowls and perform the same use, have the same characteristic and have the name as before, even after refilling. He contended that the process of refilling/reconditioning/repairing does not amount to manufacture and there is no question of levying any duty in respect of such refilled or repaired calender bowl. He said that this issue is squarely covered by a series of decisions including latest on this issue in the case of Collector of Central Excise, New Delhi v. Karuna Industries, New Delhi reported in 1992 (42) ECR 522. He said that following decisions were referred to in the said decision to arrive at the conclusion that repairing of old Compressors does not amount to manufacture:
1. Lathia Industrial and Supplies Company Pvt. Ltd. v. Collector of Central Excise, Baroda .
2. Ugar Sugar Works Ltd. v. Collector of Central Excise .
3. East India Transformers and Switch Gears (P) Ltd. v. Collector of Central Excise
6. Shri Arora while countering the arguments drew our attention to findings of the Collector in the impugned order dated 30.3.1983 in appeal No. 1501/84 and submitted that the process carried out by the party cannot be considered as the process of mere repairing. The product calender bowl is mainly comprised of two parts, the shaft and the coating thereon. The process carried out by the party is to remove the old worn out coating from the shaft and to put new coating in its place. This process requires 6 to 8 days for completion. As against total cost of Rs. 45,000/- of the bowl the cost of coating comes to Rs. 19,700/- i.e., more than 40% of this costly and lengthy process cannot be equated with the process of repairs, reconditioning etc. He said that calender bowl which was brought for refilling could not be used for calendering purpose whereas the duly refilled bowl was fit for use for calendering purpose. It was contended by him that the use and characteristics of filled bowl was different from its raw material and the process of refilling accordingly amounts to manufacture.
6A. Shri Arora contended that identity of the article is associated with function and since transformation is so drastic in the instant case and on refilling it does the function effectively as calender bowl, it is not a mere process of repairing but process of manufacturing. He referred to the following decisions in support of his contention:
1. Shri Krishna Gyanoday Sugar Ltd. v. Government of India 1980 ELT 183
2. I.BM. World Trade Corporation v. Union of India 1990 (28) ECR 433 : 1980 ELT 274
3. Attul Glass Industries Ltd. v. Collector of Central Excise .
He submitted that it is true that this issue is covered by the decision of the Tribunal in the case of Karuna Industries (Supra) as it was argued by other side, but however, he would prefer to adopt the arguments advanced on behalf of the Department in that case, incidentally that case was also argued by him as D.R.
7. We have carefully considered the arguments advanced on both sides and perused the records including citations. We find that this issue was considered at length in the case of Karuna Industries (Supra) while arriving at the conclusion that repairing of old compressors is not manufacture. It has followed a series of decisions and observations made in some of the earlier decisions are appropriate in this context
8. In the case of Saraswati Industrial Syndicate Ltd. v. Union of India and Ors. (P and H) , it was held that repairing, reconditioning (reshelling) of the old worn out Sugar Mill Rollers by the petitioner does not amount to manufacture and is not liable to duty under item 68 of Central Excise Tariff–Application of number of processes during repairing or reconditioning immaterial. Bombay High Court had taken the view in the case of Century Spinning and Manufacturing Co. Ltd. v. Union of India 1981 ELT 676 that merely because the worn out spinnerettes were melted or repaired, it cannot be said that new product was manufactured, which was liable to payment of duty. It could not be said that spinnerettes had lost their identity because of melting or repairing abroad and had become a different product
9. Supreme Court in the case of Lathia Industrial Supplies Co. Pvt. Ltd. v. Collector of Central Excise, Baroda reported in 1987 (29) ELT 757 : 1987 (13) ECR 278 (SC) : ECR C 1061 SC has observed that rerubberising and relining of old and used rollers would not amount to manufacture.
9A. The Tribunal in the case of East India Transformers & Switch Gears (P) Ltd. v. Collector of Central Excise reported in 1989 (43) ELT 561 : 1989 (25) ECR 346 (Cegat SB-B1) has held that repair of transformer does not amount to manufacture.
9(sic). The arguments advanced by the D.R. with citation on this issue were considered and also taken note of his contention as regard to percentage of replacement of parts and arrived at the conclusion that repairing of old compressors is not manufacture but actively is in the nature of repair. Since this issue was well considered, we are not inclined to take a different view. Concurring with this view, we hold that the refilling of old calender bowl is not a manufacturing activity but is in the nature of repair.
10. Since we are deciding the main issue on the point of excisability of the product in question, we do not feel it necessary to go into the contentions raised by both sides with reference to the second issue whether notional percentage of profit is also required to be added to the cost of job work including cost of old shaft supplied by the customers to determine the assessable value of calender bowl for the purpose of charging duty.
11. In the view, we have taken, these two appeals and respective cross objections filed by both sides are disposed of in the above terms.