Customs, Excise and Gold Tribunal - Delhi
True Forge Pvt. Ltd. vs Collector Of Central Excise on 9 April, 1999
Equivalent citations: 1999ECR160(TRI.-DELHI), 2003(159)ELT1175(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. The appellants are engaged in the conversion of duty-paid pipes into small pieces known as elbows, tees, reducers, etc. known as pipe fittings. The impugned order has held that this conversion activity amounts to manufacture and the appellants are liable to pay duty on these items.
2. In the appeal memorandum it has been submitted that the conversion of longer pipe lines into smaller pieces for specific use as elbow, tees, reducers, etc. does not constitute manufacture under the Central Excise law. The goods in question were pipes and tubes for the passage of gases, liquids, etc. before the conversion work was undertaken and they continue to be pipes and tubes even after the conversion work is over and they serve the same purpose as before. The processes involved are only one of cutting to size, giving shape by heating in furnace, hammering and pressing, etc. That they are sold under different names also does not mean that they are new goods. These names are only to indicate that they are suitable for specific uses. The appellants have also submitted that their case is specifically covered in their favour by the decision of the Supreme Court in the case of Bharat Forge and Press Industries Pvt. Ltd. v. Collector of Central Excise - 1990 (45) E.L.T. 525 where the Apex Court concluded as under :-
"Dutiability, manufacture - merely because goods after processing become different commercial commodity or have a distinctive name does not change - excise classification if they continue to be goods of same species - pipe fittings made out of pipes and tubes continue to be pipes and tubes - hence not a different article for excise classification but only a smaller article within the same classification provided there is no change in basic physical properties and possible end use."
3. The appellants had made the aforesaid submissions before the learned Collector (Appeals) also. However, they did not find acceptance and the Collector (Appeals) held that the Apex Court's order was with regard to old Central Excise Tariff whereunder pipes and tubes of all sorts were classifiable under T.I. 26AA(iv). The Collector (Appeals) has held that the position is different under the new Tariff and the Apex Court has also observed to this effect in Para 5 of the judgment. The Collector (Appeals) has also held that since a new item recognised and known in the trade by a different name comes into existence and also since the Tariff is specific for such item as distinct from the Tariff entry under which pipes and tubes from which they are manufactured fell, it is reasonable to hold that manufacture has taken place.
4. During hearing, learned SDR, Shri D.S. Negi has reiterated the findings in the impugned order. He has further submitted that the new Tariff classifies pipes and tubes and pipe fittings (elbows, couplings, leaves, etc.) under .... sub-heading under Chapter 73. He also submitted that once Tariff classifies under different entries, manufacture is to be presumed, he also referred in this context to the following judgments :-
(i) Garware Plastics and Polyesters Ltd. v. Collector of Central Excise - 1993 (67) E.L.T. 670 (T)
(ii) Hindustan Petroleum Corporation Ltd. v. Collector of Customs and Central Excise, Bombay - 1984 (16) E.L.T. 339 (T)
(iii) Union of India v. Hindu Undivided Family - Business known as Ramlal Mansukhrai, Rewari and Anr. - 1978 (2) E.L.T. (J 389)
(iv) Hyderabad Asbestos Cement Products Ltd. and Anr. v. Union of India and Anr. - 1980 (6) E.L.T. 735 (Delhi)
5. We have perused the records of the case and have considered the rival submissions. The appellants' case is that they are only carrying out certain processes for modifying for adapting the pipes for specific use and that pipes continue to be pipes even after these processes. They have submitted that the case is covered in their favour by the decision of the Supreme Court in Bharat Forge and Press Industries Pvt. Ltd. The Revenue, on the other hand, contends that the decision of the Apex Court in Bharat Forge and Press Industries Pvt. Ltd., is applicable only to old Tariff and not to the new Tariff and that the Apex Court itself has made observations in the judgment to this effect. We find that what weighed with the Apex Court in the Bharat Forge and Press Industries Pvt. Ltd. case was that elbows, T pipes, pieces, plugs, caps, flanges, joints, unions, collars and so on were only species of pipes and tubes and that it is difficult to say that pipe fittings, though they may have a distinctive name or badge of identification in the market, are not pipes and tubes, while all pipes and tubes cannot be described as pipe fittings. Pipe fittings are pipes and tubes. The Apex Court accepted the submission that merely because goods after processing become different commercial commodity or have a distinctive name does not change excise classification if they continue to be goods of same species. Pipe fittings made out of pipes and tubes continue to be pipe and tubes and not a different article for excise classification provided there is no change in basic physical properties and possible end-use. Further, the Apex Court took note of the fact that CCCN contains a number of entries talking about pipes, tubes, conduits of iron and steel containing a meticulous sub-division of various types of pipes and tubes and has observed that dichotomy between the old Tariff and the new Tariff cannot be imported into the old Tariff. We feel that these observations of the Apex Court regarding the more detailed sub-division of pipes and tubes in the new Tariff or the dichotomy between the two Tariff constitute no authority for holding that under the new Tariff conversion of pipes and tubes into pipe fittings such as elbows, bends, joints, plugs, caps, etc. constitute manufacture. We find that while the New Tariff contains more detailed classifications of pipes and tubes, it contains no new definition relating to manufacture. Therefore, the findings of the Apex Court that the conversion of pipes and tubes into tube fittings does not amount to manufacture attracting levy of Central Excise duty remains equally valid under the New Tariff also. The other judgments relied upon by them are also not of assistance to the Revenue, because all these judgments uphold the legal position that a different article having a distinctive name, character or use has to be brought into existence to satisfy the requirement of manufacture and if that does not take place, duty of Central Excise is not attracted. In the instant case, the pipe fittings continue to be pipes for the purpose of carrying liquid and gases even after their conversion to pipe fittings from pipes. Therefore, it is only a change of physical shape and size, adapted and modified for the purpose of specific uses. We, therefore, hold that the requirement of manufacture of new products is not satisfied in the instant case and, therefore, levy of Central Excise duty is not attracted. The appeal succeeds and is allowed with consequential relief to the appellants.