ORDER
D.M. Vasavada, Member (J)
1. The issue involved in these four appeals is the same. What is the meaning of the word “re-made” used in Rule 173L of the C.E. Rules, 1944 (hereinafter referred to as Rules)? So, we have heard all these appeals together and dispose them of by this common order. It is not necessary to recite facts of these appeals because they are all admitted and there is no dispute about them and decision in all these appeals depend upon the decision of the issue stated above.
2. We have heard Shri C.L. Beri, Ld. Advocate for the appellants and Shri L.C. Chakravorty, Ld. J.D.R. for the respondent.
3. Shri Beri made following submissions :
The appellants are manufacturing sheet glasses and some consignments get damaged in transit for various reasons. These consignments are returned to the factory of the appellants and the broken pieces are re-melted and the sheet glasses are prepared out of the said broken pieces. The appellants do not use any other material like sand, silica, etc., which are the raw-materials for the manufacture of the final product. So, it should not be treated as ‘manufacture’ but should be treated as ‘re-make’. He, further, submitted that the rate of duty remains the same and what is returned is also sheet glasses and what is finally produced out of the said damaged sheet glasses is also sheet glasses. He cited :-
1.
McNicol and Anr. v. Pinch – King’s Bench Division – 352 (1906)
.
2.
Union of India and Ors. v. Delhi Cloth and General Mills Co. Ltd. and Ors. -1977 (1) E.L.T. (J 199)
.
3.
Union of India v. S.B. Sugar Mills – 1978 (2) E.L.T. (J 666)
.
4.
Union of India v. The Britannia Biscuit Co. Ltd. – 1980 (6) E.L.T. (J 649) (G.O.I.)
.
5.
Century Spinning and Manufacturing Co. Ltd. v. Union of India – 1981 (8) E.L.T. 676 (Bom.)
.
6.
Collector of Customs, Meerut v. J.G. Glass Ltd. -1988 (37) E.L.T. 248 (Tri.)
.
4. Shri Chakravorty, Ld. J.D.R. made following submissions :-
The process of the appellants is the same, viz., melting the raw-materials. It is not material whether as raw-material, sand, silica are used or broken glass pieces are used. Even in manufacture of paper, waste paper is used for preparing pulp and same is the case in the manufacture of plastics wherein also used broken and discarded plastic articles are melted and re-moulded. The damaged goods, which are returned, are ‘bhagar’ and not sheet glasses and they were classifiable under T.I. 68 upto 28-2-1979, while sheet glasses were classifiable under T.I. 23A(i) of the erstwhile First Schedule of the Central Excises and Salt Act, 1944. Under the new tariff also, the sheet glasses are classifiable under Heading/Sub-heading 70.02 while the broken glass pieces are classifiable under 70.01.
5. We have carefully perused the arguments advanced and citations produced by both sides. Arguments advanced are, altogether, of different track because it is not in dispute, as it appears from the record that process of re-making of the broken goods into finished goods is the same and so it is the process of manufacture. Of course, it has been contended by the Ld. D.R. that the goods which are returned to the factory are not the same and so provisions of Rule 173L are not satisfied. He has cited –
Collector of Central Excise, Kanpur v. Hindustan Scientific Glass and Fancy Glassware Works and Anr. – 1985 (21) E.L.T. 195 (Tri.)
. We have perused this citation, but it is not applicable to the facts of the present case. According to the submissions of the Ld. D.R., same goods have to be returned otherwise provisions of Rule 173L would not come into play. The relevant portion of the said Rule is reproduced as under :-
“Rule 173L. – Refund of duty on goods returned to factory. –
(1) The Collector may grant refund of the duty paid on manufactured excisable goods issued for home consumption from a factory, which are returned to the same or any other factory for being re-made, refined, reconditioned or subjected to any other similar process in the factory.”
6. Bare reading of the above Rule would show that the goods have to return for being re-made, refined, re-conditioned or subjected to any other similar process. If, as argued by the Ld. D.R., same goods are to return i.e. the goods should be returned in the same condition also, then the question of re-made or re-conditioned would never arise. These words themselves suggest that the goods might have been broken, dented, bent or some such damage may have been caused and the goods will be required to be re-made, refined, re-conditioned, etc. So, in our view, the correct interpretation of the Rule should be that same consignment, i.e. the goods which were cleared should return back to the factory and not necessarily in the same condition. In the present appeals, it is not in dispute that the consignments which were cleared, were returned, but the sheet glasses which were consigned were broken in transit and were returned to the factory. The refund claims, which are the subject-matter of these appeals have been rejected by the Assistant Collector on following ground :-
“Under Central Excise Rules, the returned goods are permitted into the factory for re-making, reconditioning, etc. and not for re-manufacture. The broken pieces of glass sheets can be used only for re-manufacture. There is no such provision in Central Excise Rules to permit return of damaged duty-paid goods to the factory for the purpose of re-manufacture.”
7. The appeals preferred in all these cases were rejected by a common order by the Collector (Appeals). From the impugned order, it can be seen that the Ld. Collector (Appeals) has rejected the appeals on two grounds :-
(i) Verification of goods was not possible.
(ii) The goods returned were not the same which were cleared originally.
8. Now, as far as the first ground is concerned, the Assistant Collector, himself, in the original order, has not raised this objection (as can be seen from the O/O on record). So, it should be presumed that the department did not dispute the fact that the original consignments which were cleared were returned. So, it was not open to the Collector (Appeals) to reject the appeals on this ground because the appeals were preferred by the assessee and not by the Department.
9. As far as the second ground is concerned, it is the same as pleaded by the Assistant Collector. Now, admittedly, the word used in Rule 173L is “re-made” and the word has nowhere been defined in the Rules or in the Central Excises & Salt Act. In the same manner, the word ‘manufacture’ also is not defined except that in the Act, it has been defined what would include in the process of manufacture. Neither side has produced any technical or scientific literature to show what is meant by ‘manufactured’ and ‘re-made’ and whether there is any difference between the two and if so, what is the difference? So, we have to resort to the dictionary and other sources available to us.
10. The word ‘manufacture’ and ‘re-make’ are defined in different publications as under :-
(i) ‘Manufacture’ – to make, originally by hand, now usu., by machinery and on a large scale….
‘Manufacture’ – one who makes, concocts, or invents.
‘Re-made’ – A thing made over again from the original materials (Chambers Twentieth Century Dictionary – Eighth Reprint 1982).
(ii) ‘Manufacture’ – In relation to a drug or cosmetic includes any process or part of a process for making, altering ….” Drugs & Cosmetics Act, 1940. Section 3(f).
‘Manufacture’ – Means any process for making, altering any article or substance with a view to its use, sale, transport, delivery of the goods……”
Employees Provident Fund Act, 1952. Section 2(ia).
‘Manufacture’ – includes the process of dividing into its component parts or otherwise breaking up or unmaking any explosive, or making fit for use any damaged explosive and the process of re-making, altering or repairing any explosive – Indian Explosives Act, 1884. Section 4(2).
‘Manufacture’ – in relation to any insecticide includes :-
(a) Any process or part of a process for making, altering……any insecticide with a view to its sale, distribution or use – Insecticides Act, 1968. Section 3(j).
‘Manufacture’ – includes any art, process or manner of producing, preparing or making an article and also any article prepared or produced by manufacture – Indian Patents & Designs Act, 1911. Section 2(10).
‘Manufacturing Process’ – means any process for or incidental to making, finishing …. any article or substance with a view to its use, sale, transport,…..as beedi or cigar or both”. Beedi and Cigar Workers (Conditions of Employment) Act, 1966. Section 2(k).
‘Manufacturing Process’ – means any process for :-
(a) making, altering, repairing… any article or substance with a view to its use, sale, transport…..” Factories Act, 1948. Section 2(k).
‘Manufacture’ has been defined as a manner of adapting natural materials by the hands of man or by man-made devices or machinery and as the making of an article or material by physical labour or applied power, but the practice is to accept as ‘manufacture’ a wider range of industrial activities than such a definition would suggest. It includes articles made in situ as well as articles made in a factory. [Halsbury’s Laws of England, 3rd ed. Vol. 29 p. 23] – Encyclopaedic Law Dictionary – Second Edition 1982.
(iii) “The expression ‘manufacture’ has, in ordinary acception a wide connotation; it means making of articles, or material, commercially different from the basic components, by physical labour or mechanical process, and a manufacturer is a person by whom or under whose direction and control the articles or materials are made.” – AIR 1969 SC 499.
“No more philosophical or abstract principle can answer to the word ‘manufacture’. Something of a corporeal and substantial nature, something that can be made by man from that matter subjected to his art and skill, or at the least some new mode of employing practically his art and skill, is required to satisfy the word.” [
Allenbury Engineers (Pvt.) Ltd. v. Ramakrishna Dalmia – (1972) 2 SCWR 613]
.
11. In
McNicol and Another v. Pinch
, cited by L.A., Shri Beri, it has been observed as under :-
(i) ‘The word ‘manufactured’ is first used in Section 5 of the Act, and it seems to me quite clear that ‘manufactured’ and ‘made’ in that section mean practically the same thing.” (Bray J.)
(ii) “It seems to me that the words ‘manufacture’ and ‘make’ in the Finance Act, 1901 are used as though they were absolutely synonymous.” (Darling J.).
(iii) “made” and “manufactured” appeared to be used in the same sense in respect of the manufacture of glucose in Section 5 of the Act of 1901.” (Ridely J.).
12. So, from the above, it can be seen that ‘manufacture’ itself means to make something and both can be synonymous for each other. In the present case, as far as interpretation of Rule 173L is concerned, what the legislating authority meant was to use the word ‘make’ as synonymous for ‘manufacture’ otherwise it does not make sense and if it is not understood in that sense, then the provision of Rule 173L is likely to be frustrated. It need not be said that ‘made’ is past tense of verb ‘make’ and ‘re-made’ means made again. So, the appellants had brought the broken pieces to re-make them into sheet glasses and in our view that process is covered by the provision of Rule 173L.
13. All throughout, Ld. Advocate argued that the appellants were preparing glass from the glass and it was not ‘manufacture’, but, as discussed above, the submission was not proper. In fact, the appellants had been using broken pieces as raw-material and for the process of manufacture, it is not necessary that only raw-material which was used originally, should be used, because the process remains the same and the final product is also the same. But even if it be so, it does not preclude the appellants from seeking refund of duty under provision of Rule 173L.
14. In
Sriram Pistons and Rings Ltd., Ghaziabad v. Collector of Central Excise, Meerut – 1983 (14) E.L.T. 1927 (CEGAT)
similar issue had come for decision. In that case, the question was of interpretation of Rule 173H as it stood at the relevant time and in para 16(a), the Bench was pleased to observe as under :
“On a perusal and harmonious construction of the clauses of Rule 173H, it would appear that to avail of the benefit of the said rule the process of “remaking” should be such that it falls short of re-manufacture. A contention to the contrary ignores Clause (2) of the said Rule altogether.”
15. So, in that case, the Bench was of the opinion that “remaking” is not manufacture. It may be noted that Rule 173H(1)(b) and (2) which is necessary for the purpose, read as under:
“Rule 173H. Retention or (bringing) of duty-paid goods in the factory or warehouse. – (1) The assessee may, subject to such conditions as may be specified by the Collector, retain, in or bring into, his factory or warehouse (the goods, whether manufactured in his factory or any other factory, on which the duty has been paid), if such goods –
(b) need to be (re-made), refined, reconditioned, repaired or subjected to any similar process in the factory;
(2) The goods retained in, or brought into, a factory or warehouse in accordance with the provisions of sub-rule (1) (may, if not subjected to any process amounting to manufacture be removed) from the factory or warehouse without payment of duty subject to such conditions as may be specified by the Collector.”
So, if the assessee wants to avail of the benefit of Rule 173H, goods should not be subjected to any process amounting to manufacture. Here, we are concerned with interpretation of Rule 173L and in this Rule, there is no such provision as contained in sub-clause (2) of Rule 173H as excerpted above. It would be pertinent to note that the above excerpted Rule 173H(i)(b) has been amended and words “re-made” have been omitted by M.F.(D.R.) Notification No. 5/89-C.E.(N.T.), dated 22-2-1989. So, the Bench held as above in view of provision contained in sub-clause (2) of Rule 173H. It is also pertinent to note that the Bench has not discussed what is meant by “re-make”.
16. Moreover, it may be noted that in Rule 173H sub-clause (2) words “may, if not subjected to any process amounting to manufacture” were substituted by M.F.(D.R.B.) Notification No. 199/76-C.E., dated 26-6-1976. So, the Government thought it fit to introduce this amendment in Rule 173H and thereby restricting application of the said Rule only to the process which fell short of manufacture or in other words to the process which did not amount to manufacture. No such amendment has been made in Rule 173L, the Rule with which we are concerned in the present case. Moreover, the Government appears to have realised that words “re-made” could be interpreted in the sense of ‘manufacture’ and that seems to have made the Government to delete the words “re-made” from sub-clause (b) clause 1 of Rule 173H; while no such amendment has been introduced in Rule 173L. So, in our view, decision in Sriram Pistons case (supra), does not clinch this issue.
17. In light of above discussion, we allow all these appeals and set aside the impugned orders with consequential relief to the appellants.
I.J. Rao, Member (T)
18. I regret my inability to agree with my learned brother on the point whether the process involved in bringing into existence new sheet glass from damaged sheet glass amounts to manufacture or is merely remaking. Rule 173L deliberately omits, from its ambit, remanufacture. It mentions the purposes of being remade, refined, reconditioned or any other similar process. The omission of the word remanufacture in this Rule is, in my opinion, deliberate.
19. Central Excise Law not having made any distinction between remanufacture and remaking, guidance has to be taken from the definition of manufacture and a comparison of the same with the language of Rule 173L. Such a comparison shows that manufacture is something more than remaking. This is indicated also by the ordinary meaning of the two terms. If glass sheets are brought into existence in a process starting from the stage of broken glass which is the raw material, and culminating in glass sheets, such a product goes well past the stage of ‘remaking’; it is ‘manufacture’ in the simplest sense of the word.
20. In
Sriram Pistons and Rings, Ghaziabad v. Collector of Central Excise, Meerut, reported in 1983 (14) E.L.T. 1927
the Tribunal examined a similar question and held that remelting and remaking of pistons amounted to manufacture (paragraph 16 of the judgment). In the present matters also scrap glass which is nothing but raw-material as urged by the learned DR is remanufactured into glass sheets. The process is nothing but manufacture; it is not covered by the scope of Rule 173L.
21. For this reason I dismiss these appeals.
In view of the two orders placed above, a difference of opinion has arisen between the two Members of the Bench. The point of difference is formulated as below:
What is the meaning of word ‘remade’ used in Rule 173L of Central Excise Rules, 1944? Is it different from ‘manufacture’?
The file is placed before the Honourable President for further orders.
K.S. Venkataramani, Member (T)
22. The point of difference between the two Members has been referred to this Bench is as follows :-
“What is the meaning of word ‘remade’ used in Rule 173L of Central Excise Rules, 1944? Is it different from ‘manufacture’?
23. Shri V. Sridharan, learned Counsel appearing for the appellants referred to the provision of Rule 173H(2) of the Central Excise Rules and submitted that the provisions show that remaking for the purposes of that Rule might include one of manufacture. He further contended that Rule 173L(3) does not bar refund if the remaking amounted to manufacture. He further relied upon the Board’s instruction contained in F.No. 261/27/1/77/LX-A dated 3-9-1977. It envisages that in case of goods where process of refining, reconditioning etc. cannot be carried out without loss of identity of defective goods out of melting etc., broad co-relation should be enough and exact co-relation of the goods received for reprocessing with the goods removed thereafter need not be insisted upon. The learned Counsel also referred to Circular No. 2/87, dated 7-1-1987 on the question of interpretation of the word ‘remade’ used in Rules 173H and 173L. In that Circular the Board has cited the Law Ministry’s advice and had said that according to the Law Ministry, the meaning attached to the word ‘remade’ occurring in 173L amounts re-manufacture. He also relied upon the case of
Collector of Central Excise, Meemt v. J.G. Glass Ltd., reported in 1988 (37) E.L.T. 248 (Tribunal)
, where the Tribunal held that re-making of glass out of rejected duty paid broken glass vials is manufacture and that in such a case also 173H(2) will apply. The learned Counsel further pointed out that the reliance placed by the Member (Technical) in the case of
Sriram Pistons and Rings Ltd., Ghaziabad v. Collector of Central Excise, Meerut, reported in 1983 (14) E.L.T. 1927 (CEGAT)
did not deal with Rule 173L but was relating to Rule 173H. Shri L.C. Chakravorti, the learned Senior Departmental Representative appearing for the Department contended that the word re-making has the shades of meaning as brought out at page-5 of Order of the Member (Judicial), para-10. He submitted that re-making will mean and cover the entire process from the original raw material stage. In the present case the process will be from the broken glass and not the earlier stage of raw material like sand silica etc. Therefore, the process is not re-making as it does not involve making a thing over again from an original raw material. Therefore, the learned Senior Departmental Representative submitted that refund under Rule 173L is not eligible. He also submitted that Board’s Circulars are not binding on the Tribunal.
24. We have carefully considered the submissions made by both the parties herein. Rule 173L is reproduced below :-
“RULE 173L. – Refund of duty on goods returned to factory. – (1) The Collector may grant refund of the duty paid on manufactured excisable goods issued for home consumption from a factory, which are returned to the same or any other factory for being re-made, refined, reconditioned or subjected to any other similar process in the factory.”
The question is whether the word ‘remade’ occurring in that Rule is different from manufacture. In this context, this Tribunal in the case of
Shriram Refrigeration Industries Ltd. v. Collector of Central Excise, Hyderabad, reported in 1986 (26) E.L.T. 353 (Tribunal)
had occasion to refer to the meaning of the term remade while examining the case relating to an issue under Rule 173H which covers retention or re-entry of duty paid goods in a factory. The word re-make, the Tribunal noted will mean to make once more or once again with the implication that the previous doing was deficient or erroneous and requires alteration or improvement. According to the Compact Edition of the Oxford English Dictionary ‘remake’ means to make over again, reconstruct; to make again into something. In the Tribunal decision in the case of M/s. J.G. Glass Ltd., 1988 (37) E.L.T. 248 (Tribunal), the Tribunal was considering the application of Rule 173H to the case of Glass vials returned to the factory. The Tribunal noted that the process adopted by the respondent therein in making Glass vials out of duty paid rejected/broken glass vials is nothing but a process of manufacture but at the same time the Tribunal found substantial force in the respondent assessee’s plea that there is no other way of removing defect in the duty paid rejected glass vials and if the permission is not granted, the Rule itself could become inapplicable to glass vials which may not be the intention of the Rule making authority. The Tribunal, however, observed that the term re-making necessarily means manufacture of the same product from the duty paid goods. Further in the Shriram Refrigeration Industries Ltd. case, the Tribunal referred to Government of India clarification at the time of amendment of Rule 173H on 26-6-1976 by letter dated 2-7-1976, wherein it was clarified “It may, however, be noted that remaking, refining, reconditioning or subjecting the goods to any other similar process will not amount to manufacture if the goods are subsequently cleared after rectification of defect is in the same form in which they were retained or brought in the factory”. In that decision the Tribunal further cite the Bombay High Court judgment reported in 1981 (8) E.L.T. 676 (Bom.) in the case of
Century Spinning and Manufacturing Company Limited v. Union of India
for the purposes of what will be the same form. The Bombay High Court was dealing with the re-import of spinnerettes after re-making abroad. The Department denied duty concession because unserviceable and worn out spinnerettes have been exported which were remelted, refined and remade into spinnerettes and that these were new goods or remanufactured spinnerettes and, therefore, identity could not be established with those exported for repairs. The High Court held that if the remade spinnerettes were of identical weight and exact description as of worn out spinnerettes, there was no loss of identity because of in-process melting of the old spinnerettes. Further in the decision of the Tribunal in the case of
Tata Tea Ltd. v. Collector of Central Excise, reported in 1990 (50) E.L.T. 96 (Tribunal)
dealing with a case of under Rule 173L, the Tribunal noted the meaning of remake in the Webster’s Third New International Dictionary as “to give a different form to: TRANSFORM: REVISE”. The Tribunal noted that the term re-make is of wide import and it can embrace a process of transformation. In another case of
Collector of Central Excise v. Insulated Conductors Pvt. Ltd., reported in 1990 (50) E.L.T. 545 (Tribunal)
again relating to a case of refund under Rule 173L Tribunal held that Copper Strips and fibre glass copper strips are goods of the same class. The Tribunal in that case held that the goods received and goods cleared both fall under the same Tariff Item and that even without liberal construction, the two kinds of copper strips should be considered as goods of the same class for the purposes of refund under Rule 173L. We have also noticed that the Department had taken up the matter with the Law Ministry in respect of the interpretation of the word ‘re-made’ used in Rule 173H and 173L of Central Excise Rules and the Law Ministry had given its opinion as follows :-
“Now, we come to Rule 173L of the said Rules which provides for refund of the duty paid on goods which are returned to the factory for being ‘remade’. The excisable goods can be cleared from the factory only by paying the duty payable on them and the goods can be excisable only when manufacturing process is involved in their production. If the goods are returned to the factory under this Rule, the same can be cleared again by paying the duty payable. It means the goods in question have gone under process of manufacturing which were returned for being ‘remade’. Thus, the meaning attached to the word ‘remade’ as used in this rule amounts to remanufacture.
Therefore, the view of the Department that in case of Rule 173H, the process of re-making should fall short of remanufacture and in case of Rule 173L of the Central Excise Rules, 1944, the process of remaking should amount to remanufacture appears to be legally correct”.
In the present case the glass that is received in the damaged condition is remelted and sheet glasses are prepared out of broken glass. Therefore, in the wider meaning of the term ‘remake’ which will cover a process of transformation which could amount to remanufacture the processes undertaken by the appellants herein of re-manufacture of the glass-sheet out of duty paid defective/broken glass has to be taken to be covered by the scope of Rule 173L. As the Tribunal noted in the J.G. Glass Ltd.’s case (supra), there is no other way of remaking in respect of such goods. It also can be concluded from the ratio of the case law cited supra that sheet glass received and that cleared would be of the same class to goods for the purposes of Rule 173L. It is, therefore, concluded that the meaning of the word ‘remade’ used in the Rule 173L is of wider import and would cover a process of transformation and implies remaking in the sense of making once again or manufacturing once more, that is, remanufacture. It is also noted that it is the understanding of the Departmental authorities also based on the Law Ministry’s advice that the process of remaking under Rule 173L would amount to remanufacture. The difference of opinion is disposed of accordingly.
FINAL ORDER
In view of the majority opinion, all the four appeals are allowed with consequential relief, if any, to the appellants.