ORDER
K.S. Venkataramani, Member (T)
1. This appeal is directed against the order dated 8-10-1985 passed by the Collector of Central Excise & Customs, Jaipur. The facts are that the appellants, herein, were receiving steel bars and tubes from M/s. National Engineering Industries, Jaipur in rough form and they were returning the goods to them after turning into sizes as per the requirements of the customers for which they received job charges. The appellants, subsequently, filed a refund claim on the ground that the process of turning of bars and tubes undertaken by them was not a process of manufacture and no duty can be levied thereon under Item 68 GET. The Assistant Collector of Central Excise, Jaipur, in his order dated 22-5-1980, accepted the contentions of the appellants. He held that the process of turning of tubes and bars did not bring into existence a new commodity and was not leviable to central excise duty under Tariff Item 68 because the same are already covered under Item 26AA of the Central Excise Tariff. He, therefore, ordered that the refund claim be granted. This order of the Assistant Collector was reviewed by the Collector of Central Excise & Customs, Jaipur in the impugned order under Section 35E of the Central Excises & Salt Act, 1944. The Collector held that the Assistant Collector’s order was not legal and correct. The Review Show Cause Notice alleged that the steel bars and tubes received in rough form was subjected to the process of turning, polishing and sizing which resulted in the change of the said products and these processes amounted to that of manufacture as defined in Section 2(f) of the Central Excises & Salt Act, 1944. On the consideration of the reply. the Collector held that the steel bars and tubes had undergone process of machining after which they became processed products classifiable under Item 68 CET. He held that the rough steel bars and tubes were subjected to processes like turning, machining and polishing which convert these rough products to processed and finished products. The Collector, therefore, set aside the Assistant Collector’s order granting refund to the appellants.
2. Shri Krishana Kumar, ld. Counsel alongwith Shri Pradhan, Id. Counsel, appeared for the appellants. He contended that the Assistant Collector had already found that the processes undertaken by the appellants do not amount to processes of manufacture. No new product has emerged as a result thereof. The Id. Counsel submitted that the goods remain as tubes and bars even after the processes carried out by them. The Ld. Counsel relied upon the case law as reported in
1988 (18) ECR 459 in the case of SAIL v. Collector of Central Excise
and in the case of
SAE India v. Collector of Central Excise – 1988 (17) ECR 511
. The Ld. Counsel, further, contended that the Assistant Collector, having taken into consideration of the relevant factor, had bonafidely adjudicated the case on a question of fact. It was argued by the Ld. Counsel that the review power should not be exercised unless it is patently incorrect, illegal or improper whereas in the present case, there is nothing patently wrong in the Assistant Collector’s order.
3. Smt. Shanti Sundaram, ld. SDR, contended that turning, sizing and polishing undertaken by the appellants on the tubes and bars amounted to process bringing into existence a new product with separate identity. The products at their hands, after the process, has a separate name as machined roller rings as is evident from ground F of their Grounds of Appeal. The case law cited by the appellants, it was urged, do not relate to the processes which are concerned here. It was, further, contended that when the Assistant Collector’s decision draws an improper conclusion from the facts, then it becomes incorrect and illegal order fit to be reviewed.
4. The submissions made have been carefully considered. The question is whether the processes carried on by the appellants on the tubes and bars would amount to one of manufacture. The Assistant Collector had found that the processes of turning and sizing of the bars and tubes on which the duty has already been paid under Item 26AA, does not bring a new commodity into existence. The Collector in review order, however, has held that the steel bars and tubes undergo a process of machining after which they became processed products classifiable under Item 68 CET. On this aspect, it is found that the Tribunal has held in the case of
ACC Bebcock Ltd. v. Collector of Central Excise – 1989 (44) E.L.T. 369
that machining on casting does not have an effect of bringing in any new product into existance which is known in the market as such. It is, further, noted that in the case of
Bharat Forge & Press Industries (P) Ltd. v. Collector of Central Excise – 1990 (45) E.L.T. 525 (S.C)
, the Supreme Court held that pipe fittings made out of pipes and tubes, continue to be pipes and tubes and hence not a different article for excise classification. In that case, the appellants, therein, purchased steel pipes on payment of excise duty and cut the pipes and tubes into different sizes giving them shape and turn them into pipe fittings and the question was whether the pipe fittings so produced also fall under Item 26AA or whether they should be classified under Tariff Item 68. The findings of the Supreme Court, as above, that the goods will continue even after those processes to fall under Item 26AA only is a finding that will also go to support the appellants herein. The Department has also in this case not brought out as to how the goods are known in the market after the processes at the hands of appellants. There is no rebuttal of the appellants’ claim, as confirmed by the Assistant Collector, that turning and machining of rods and tubes involves only the removing of rust and smoothening their surface and turning and sizing them to the required specifications without the rods/tubes undergoing any change in their form, character or shape and that rod remains a rod and a tube remains a tube and they continue to be known and identified as such. The goods, admittedly, are already duty-paid under Item 26AA CET. The Department has not established by evidence for levying duty on the goods at the hands of the appellants, herein, under Item 68 CET by showing that after the machining and turning adopted by the appellants, a new product known differently in the market has come into existence as a result of process of manufacture.
5. The argument that this was not a fit case for exercising a power of review by the Collector, is not acceptable because that power under Central Excises & Salt Act at the material time given to the Collector, it is well settled, is essentially one of Superintendence of the work of the subordinates by a superior authority and will apply to those situations where such superior authority examines an adjudication order passed by a subordinate to satisfy himself as to the legality, propriety as well as the correctness of such adjudication order which has been done in this case. In the result, on merits, it is held that there is a lot of substance in the appeal and accordingly the impugned order is set aside and appeal allowed.