ORDER
J.H. Joglekar, Member (T)
1. Applicants are a statutory body of the Govt. of Maharashtra engaged in the generation and distribution of electricity in the State of Maharashtra. They have workshops for fabrication of goods required by them for these activities at various places. In the town of Phursungi they had two such workshops. From October 1987 to April, 1992, 13 Show Cause Notices were issued to the Central Fabrication Workshop at Phursungi. The common allegation was that M/s M.S.E.B were manufacturing (1) M.S. angles and plates and channels and (2) fabrications by cutting, drilling/punching etc. as per the requirements. The Show Cause Notices allege that these activities resulted in the manufacture of separately identifiable excisable and dutiable products on which duty was not paid. In some of the Show Cause Notices the goods were described. The Show Cause Notice dated 12.1.1990 describes the goods as follows:
(1) 10 D.P. Sets (2) Single Pole guardings (3) Single cross arms (4) 22 KV ‘V’ cross A (5) Vertical top fittings (6) Horizontal top fittings (7) Four pin armas (8) Two pin cross carms (9) Different types of clamps falling under heading No. 7308.90 of CETA.
These Show Cause Notices were adjudicated upon by the Assistant Collector vide common order dated 30.10.1992. Before the Assistant Collector M/s M.S.E.B. maintained that the activities undertaken by them on duty paid goods purchased from the markets such as bending, punching, drilling, cutting, straightening and pointing did not result in the emergence of separately excisable commodities. Case law in support of their contentions was cited. The Assistant Collector observed that the various goods manufactured were elements for use in electric poles for holding the wires carrying electricity. He denied the suggestion that the duty paid goods thus processed did not result in manufacture, but held that the emergent products had different character, use and function. He held that the case law cited before him did not apply. His observation was based on the logic that most of the citations pertained to the old tariff. He cited the Chapter heading 7308 and held that the description therein covered the present resultant products. On these observations he confirmed the demand totally amounting to Rs. 33,96,581.66. He also imposed a penalty of Rs. 1 lakh.
2. The Collector of Central Excise (Appeals) upheld this order. Before him the claim was made that the 9 items specifically listed in some of the Show Cause Notices were not made in the fabrication workshop at all, but that they were manufactured in another small workshop in the O and M division at Phursingi. The Commissioner, however, relied upon a letter of a Sub-Engineer in the fabrication workshop and rejected these submissions. He held the 9 items as marketable and excisable commodities. In doing so he placed reliance on certain judgments of the Tribunal. He upheld the lower order of confirmation of duty but set aside the penalty imposed upon M/s M.S.E.B. The present appeals are filed against this order.
3. Initially one appeal and one stay application was filed. On 22.1.1999 when the stay application came up for hearing it appeared that in terms of the Tribunal judgment in the case of Kolsite Machine Fabrik Ltd. the appellants were required to file supplementary appeals in numbers equal to the SCNs. Accordingly the appellants filed more appeals as well as equal number of applications for stay along with application for condonation of delay.
4. In view of the fact that the initial appeal was in time, the delay in filing of the supplementary appeals is condoned.
5. We have heard Shri S. Rustomjee, advocate instructed by M/s Jayakar & Co. appearing for the appellant and Shri V.K. Suman for the revenue.
6. Shri Rumstomjee stated that the 9 articles specifically mentioned by the Commissioner (Appeals) in his order, were not manufactured in the fabrication workshop at all. He was not aware of the letter on which reliance was placed by the Commissioner. It is this submission that this letter was not referred to the Show Cause Notice nor was a copy thereof made available to the applicants. In reply to a specific query Shri Rustomjee clarified that in this workshop M.S. angles, plates and channels were never manufactured. The activity is that of processing the duty paid angles, channels etc. for fitment into the transmission towers. He maintained that the ratio of the judgments cited before the Commissioner was relevant. He further relied upon the following judgments in which it was held that cutting, drilling and punching roles and bending, pointing etc. of duty paid raw material did not amount to manufacture. (1) Karnataka Electricity Board v. CCE, Bangalore 1999 (105) ELT 328, and (2) Vindya Paper Mills Ltd. v. CCE, Aurangabad . He further relied upon final Order in appeal No. E/5547/91-B CCE, Aurangabad v. MSEB dated 1.7.1998. The MSEB in the matter before the Tribunal had shown similar goods as non-excisable in the classification list filed by them. The Tribunal following the judgment of the Supreme Court held that the cited activities did not amount to manufacture. On this ground he seeks unconditional stay of recovery of the duty confirmed as well as waiver of the pre-deposit thereof.
7. Shri V.K. Suman on the other hand supports the Commissioner’s findings.
8. We have carefully considered the rival submissions. The SCNs seem to contain incorrect information. It is the claim of Shri Rumstomjee that the unit never manufactured channels of angles or plates which they are charged to have manufactured in the first two SCNs. The impugned order and the order leading thereto also do not hold that such goods were manufactured. Both orders deal only with the processes undertaken by the applicants on the angles, channels etc. It is also forcefully submitted that 9 items specifically listed were not manufactured by the fabrication workshop at all. We cannot settle this controversy in the absence of the text of the letter on which reliance has been placed by the Id. Commissioner. As regards the commodities emerging on having undergone the stated processes, we are unable to come to a prima facie impression in the total absence of the description of the articles which emerged. There is a bewildering array of judgments on this issue. The Commissioner’s order contains judgments both against and in favour of the department. In pronouncing each of the judgments, the court or the Tribunal were aware of the exact identity of the raw materials as well as of the processes having been undertaken on those materials and also of the resultant products. In some of the judgments the description is available. Only when the actual transformation is recorded on paper it is possible to correlate that transformation to the situation before an appellate authority in a given case. In the absence of any such description emerging from the disputed Orders it is not possible for us to determine as to which set of the judgments and the ratio thereof could be adopted and applied. In such situations it is required of the adjudication and appellate authority to describe in detail the processes of transformation to support their view for or against the assessee.
9. At the initial stage we were inclined to dispose of the stay applications alone. Shri Rustomjee suggested that MSEB would be in a position to produce the required information including photographs etc. In his opinion, however, it would be proper if the task appreciating the physical transformation from an angle or a channel into a component of the transmission tower, is left at the executive levels. We see merits in this suggestion. On a specific query both Shri Suman and Shri A.K. Chatterjee, Ld. SDR were also of the same opinion. We, therefore think it proper to dispose of the main appeals themselves at this stage after granting formal stay and waiver of the pre-deposit of the sums involved.
10. On finding that the impugned order as also the first order do not give the logic leading to the belief that the processes undertaken amounted to manufacture we deem it proper to set aside the impugned orders. The appeals are allowed by way of remand. The proceedings are remitted to the jurisdictional Assistant Commissioner for de novo consideration. In the de novo proceedings he shall state and place on record the actual processes undertaken by M/s MSEB at the fabrication workshop at Phursungi. He shall describe the transformation process and then state his findings with reasons as to whether such processes resulted in creation of a new excisable commodity. He will also reproduce the letter of the Sub-Engineer referred to in para 6 by the Commissioner (Appeals) and independently verify whether the 9 products enumerated in some SCNs were in fact manufactured in the workshop to which the SCNs have been addressed. Copy of this letter shall also be given to M/s MSEB. M/s MSEB will cooperate with the jurisdictional Assistant Commissioner and place before him all the data and photographs etc. The Assistant Commissioner shall give them adequate opportunity to be heard and then pass detailed speaking orders on each of the items in dispute. Stay applications also stand disposed of.