ORDER
I.J. Rao, Member (T)
1. The appellant company was fabricating columns, purlins, bracings, rafters and other items required for erection. The fabrication was out of duty paid iron and steel products such as plates, angles etc. by subjecting them to the process of cutting, welding revetting etc. The Assistant Collector held that the process of conversion of iron and steel products into columns etc. amounted to a process of manufacture since the resultant goods had a distinct name, character and use, different from the raw materials. The full details of the matter were very well recorded by the Assistant Collector in his order. The following portion of his order is reproduced in view of its detail :-
“The raw materials used in fabrication are standard profiles and plates as supplied by rolling mills of Steel Plants i.e. joists, channels, angles and plates of various sizes, length and thicknesses as required. The fabrication of steel structure generally involves the following processes. They are partly/wholly completed at their factory and the balance operations are completed at the site.
(i) Templating.
(ii) Cutting to size by guillotine or oxy-planer.
(iii) Drilling of holes.
(iv) Assembly.
(v) Welding.
(vi) Bending if required.
(vii) Painting and Marketing.
The processes normally left for completion at site of erection are :-
(i) Further assembly.
(ii) Welding/bolting.
(iii) Erecting in position.
(iv) Bolting/Welding in position.
(v) Final painting.
The structural members manufactured in factory are broadly named as following in order to facilitate identification at the time of final assembly at site:-
(i) Columns.
(ii) Beams.
(iii) Bracings.
(iv) Purlins.
(v) Rafters, ties and scantlings, structs for roof trusses, girders trusses, roof girders etc.
(vi) Crane girders/gantry girders.
(vii) Other members.
After the semi-manufactured materials are despatched to sites, they are assembled and erected as per the markings shown on drawings in sequences and other operations listed above are completed.”
2. The Assistant Collector in the very detailed order came to the conclusion that manufacture was involved. Among other reasons he recorded the following :-
“In order to examine the exact nature of work carried out by the company in their factory, I propose to go through some of the contracts in respect of fabrication of steel structurals and their erection undertaken by the company alongwith the work specification. On going through the contract in respect of fabrication of steel structurals and erection of shed for gas turbine power stations at Uran (R & C Order No. S-4608), it is seen that as per the terms of the contract, the company was required to “fabricate steel structures for portals, frames, columns, roof trusses, purlins, bracings and crane beams including all connections such as bolts, nuts, washers, all materials being of tested quality conforming it with the relevant Indian Standards, all structural elements to be painted with one primary coat of shop paint of red oxide, zink chromate primer, thickness 50 M.Y. Supply, fabrication and delivery at site…of anchorage materials, of steel profiles and steel cages to be welded together.”
As per the terms and conditions of the contract each part whether it is beams, columns, purlins, or bracings, have to be fabricated as per the specific design/drawing/specification supplied by the customers. On going through some of the drawings furnished by the company, it is seen that detailed specifications in respect of design, size and thickness is given. The “columns” and “beams” are made either from standard I sections obtained from primary manufacturers. However, if columns and beams longer than 10 or 12 metres are required to be made, then the company is first making the l-sections out of duty paid steel plates. The trusses and bracings are generally made from angles. The different of holes, assembly in factory, welding, bending if required and painting. The nature of job done be the company can not be regarded as a simple process of drilling and cutting out the same is of a highly intricate, specialised and technical nature as the work has to be executed strictly as per the customer’s designs, drawings and specifications. And the various processes of cutting, welding and drilling etc. are not just isolated processes but part of a single operation carried out with the purpose of fabricating the exact type of structurals required by the customers.
The contention of the company that the itmes fabricated by them attained names like trusses, bracings, columns, girders, beams etc. only after they were placed in their respective position at the time of erection, is also not tenable. On going through the contract, it is seen that orders are placed for fabrication of items such as columns, beams, trusses, purlins etc., the drawings submitted by the company are also in respect of items such as columns, beams, trusses, etc. The company have themselves admitted that the structural members manufactured by them in their factory are broadly named as columns, beams, bracings, purlins etc. From the details of processes and the drawings submitted by the company, I am of the view that the items fabricated by the company can not be regarded as semi-manufacture materials as contended by the company but are in fully finished and identifiable conditions. It is seen that in a few cases where the size of the columns, beams and trusses does not permit their transportation in one piece, these are manufactured in two or three portions so that they can be easily transported and subsequently joint together at the site before being used in erection. The fact that in a few cases the fully finished beams, columns and trusses are transported in knocked down conditions does not mean that the same are in semi-manufactured condition. And therefore this argument of the company is also patently incorrect.”
3. There are also other findings of the Assistant Collector who followed, inter alia, an order of the Tribunal in Structurals and Machineries (Bokaro) Pvt. Ltd. v. Collector of Central Excise, Patna [1984 (17) ELT127 (Tribunal)]. The Collector (Appeals) rejected the appeal against the Assistant Collector’s order. Hence the present appeal.
4. Shri Kampani, the learned Consultant submitted that the Visakha Steel Plant (V.S.P.) placed some orders on the appellants for some jobs and argued that no fabrication was involved and only process like welding cutting etc. were involved. He submitted that in a similar matter another Assistant Collector took a different view. Arguing that when Iron and Steel angles were supplied for building transmission towers there was no liability under Tariff Item 68. The learned Consultant cited 1987 (11) E.C.R. 692 (Cegat-BI) – [Collector of Central Excise, Baroda v. Dosal Private Ltd.]. Shri Kampani cited the judgment in Aruna Industries Vishakapatnam and Ors v. Collector of Central Excise, Guntur [1986 (25) ELT 580 (Tribunal)] and emphasised that the facts in that appeal were exactly similar to those in the appellants’ case. Arguing that machining of a casting did not amount to manufacture, he cited a judgment of the Patna High Court [reported in 1983 ELT 17 (Patna)] in Tata Yodogwa Limited v. Assistant Collector of Central Excise, Jamshedpur and Ors.. Bringing out an analogy Shri Kampani argued that the Supreme Court in 1986 (26) ELT 3 (S.C.) – [Sterling Foods v. State of Karnataka and Anr.] held that scaling of fish was not manufacture.
5. Shri Nigam the learned SDR opposing the arguments submitted that contrary to what was claimed by the learned Consultant the appellants fabricated columns etc. out of plates, angles etc. supplied by VSP. This resulted in manufacture of items having distinct name, use and character. Referring to the Assistant Collector’s order the learned SDR pointed out that the contract was examined by the officers and the range of processes recorded in the order showed that what the appellants undertake was not a simple process but a series of complicated processes resulting in the manufacture of the end-products. He submitted that in Aruna Industries (supra) the facts were different as there step by step erection was involved whereas in the present matter it was not. He submitted that the facts of Structural and Machineries (supra) were on all fours with the present matter.
6. Shri Kampani in his rejoinder submitted that the facts in Aruna Industries (supra) are exactly similar to the facts of the present matter and stated that the various structurals come into existence only when they are permanently fixed. He also pointed out that in Structural and Machinery (supra) the structurals were fixed permanently. He once again reiterated that no fabrication was involved and only cutting and drilling.
7. We have considered the arguments of both sides. In view of the heavy reliance of the appellants on Aruna Industries (supra) we carefully perused the judgment. The contracts in that case between the VSP and the appellants showed that the agreements were for construction fabrication and erection of structural steels and cladding works. The contracts comprised construction and completion of works. The Tribunal therein observed that there was a sale of raw materials by one party to the other. It was a composite contract for work and labour and not for sale of goods (paragraph-18). In paragraph 22 of the order the Tribunal observed that the assessee erected the structures on the site allotted to them by VSP and that since the assessees were only erecting a construction and were fabricating the materials on the spot, the workers were merely “birds and passage”. Therefore, they cannot be considered as workers within a factory and the structures cannot be deemed to be fabricated in a “factory”.
8. In the present appeal the facts are different as the appellants produced the end-products in their own factory and sent them back to VSP. Therefore we reject the con- tention of the appellants that the facts of these appeals are on all fours with the facts in Aruna Industries.
9. In Structurals and Machineries (supra) the Tribunal held that structurals are different from steel plates and flats and that the process amounted to manufacture. In paragraph 8 of the order the Tribunal recorded as follows :-
“On behalf of the respondent, Shri V. Lakshmi Kumaran, learned Senior Departmental Representative stoutly controverting Shri Khaitan’s arguments submitted that the operations carried out by the appellants in respect of the jobs constituted manufacture. He referred to meaning of ‘Structure’ in Blacks’ Law Dictionary and to meaning of ‘Fabrication’ as given in Chamber’s dictionary. He further submitted that the appellants did fabrication work from drawings and specifications given to them by the Bokaro Steel Plant. The nature of the job done by the appellants was intricate and not just drilling holes here and there. The fabrication work undertaken by the appellants for the specific purpose of erection of structures constituted manufacture. The work done by the appellants brought into existence new goods called structurals which were different from the raw materials supplied to them by the Bokaro Steel Plant on which the appellants did fabrication work. He further submitted that the finished products known as purline, trusses etc. for erection of structures are different from raw materials M.S. Plates including channels and flats. These are broadly known as structurals. In support of his argument, he relied on Allahabad High Court decision in the case of Agra Metal Perforators v. Commissioner, Sales Tax, U.P. Lucknow – (1981) 48 S.T.C. 378. In this ruling, for the purpose of Central Sales Tax Act and the U.P. Sales Tax Act, it was held that the perforated iron sheets are different commercial commodity from iron and steel. Shri Khaitan distinguished this ruling from the facts of the present case and submitted that it was not applicable. It might be pointed out that the appellants have before us filed drawings and photographs in respect of some of the structural work carried out by them. They also filed a copy of their contract with M/s. Bokaro Steel Plant and the work orders for fabrications issued to them from time to time. We have carefully gone through all these documents and the citations relied on by the parties. The rate contract for fabrication of light/medium structures according to drawings and specifications with one coat of shop paint and delivery of fabricated structures to the erection sites. Work orders dated 15-10-1979, 3-3-1979, 22-11 -1979,3-5-1979 and 19-2-1979 in substance reproduce the same description. A perusal of the contract shows that the appellants have to transport raw steel from the Bokaro Steel Plant and have to keep account of the raw steel issued to them. This would mean that the appellants have to perform processes on war steel. If the work carried out by the appellants were considered in isolation, one might be led into concluding that it does not constitute manufacture but it has to be remembered that the work carried out by the appellants is of highly intricate, specialised and technical nature. If the nature of the work is examined with reference to contract, the work orders and the designs and drawings, there can be no doubt that the work is of highly intricate specialised and technical nature. After the processes are done by the appellants the raw material consisting of beams, angles etc. gets such shape and character that they can be readily fitted into structures. Such products are commonly known as structurals. An analogy in the case may be drawn with pre-fabricated houses, where parts of pre-fabricated houses are so constructed as to be fabricated or fitted into a pre-fabricated house. Another illustration could be of a walking stick or toy made from wood. The identity of such articles must be held to be different from raw materials which have gone into their…such activities would certainly be called manufacturing activities.”
10. In our opinion the facts considered by the Tribunal in Structurals and Machineries (supra) are identical to the facts of the present matter. We note the statement of Shri Kampani that this appeal was allowed. The appeal was allowed partly. The extracted paragraph is the only one relevant to the present proceedings, and it is quite clear.
11. Shri Kampani’s reliance on the judgment in Collector of Central Excise, Baroda v. Dodsal Pvt. Ltd. (supra) does not appear to be relevant as in that judgment transmission towers were held to be not excisable goods since they were erected at the site. The other finding in the judgment to the effect that processes of straightening, cutting, bending, punching and galvanising iron and steel angles etc. do not constitute manufacture does not help the appellants as the processes they undertake as recorded by the Assistant Collector (and not disproved) go much father than these processes. In this context we refer to the judgment of the Supreme Court in Empire Industries Limited and Ors. v. Union of India and Ors. [1985 (20) ELT179]. Therein, the Hon’ble Court was examining the meaning of “manufacturing processes” and observed that to constitute manufacture it is not necessary that one should absolutely make out a new thing. The Court observed that it is the transformation of a matter into something else and that that something else is a question of degree, whether that something else is a different commercial commodity having a distinct character, use and name and is commercially known as such. In the same judgment the Court further observed that if by application of labour and skill an object is transformed to the extent that it is commercially known differently, it Will suffice to say that manufacture has taken place for the purpose of Central Excise. The degree of transformation and labour and skill spent are irrelevant. The Court further observed that the question whether a particular process is a process of manufacture or not has to be determined having regard to the facts and circumstances of each case.
Applying these principles, laid down by the Supreme Court, and in the light of our observations above, there can remain no doubt that manufacture has taken place in respect of the goods under examination.
12. The judgment of the Patna High Court in Tata Yodogwa Ltd. (supra) cited by the learned Consultant is not relevant as it is not merely machining of a casting that Is done by the appellants but much more. Sterling Foods (supra) also does not help the appellants because what the appellants did is much more than something like the scaling of fish. The activities undertaken by the appellants clearly amount to manufacture.
13. We, therefore, find no reason to interfere with the impugned orders. We dismiss the appeal.
