Customs, Excise and Gold Tribunal - Delhi
M/S. Mahavir Aluminium Ltd. vs Commissioner Of Central Excise, Jaipur ... on 25 April, 2001
Equivalent citations: 2001(76)ECC110, 2001(131)ELT657(TRI-DEL)
ORDER
Jyoti Balasundaram
1. The above appeal arise out of the order of the Commissioner of Central Excise, Jaipur, who has confirmed a duty demand of Rs.44,35,637/- on aluminium billets captively consumed for the manufacture of aluminium extruded products (irrigation pipes) which were exempt from, payment of duty w.e.f. 1.3.94, and imposed a penalty of Rs.5 lakhs on the appellants herein. The period in dispute is June to December 1995.
2. The brief facts of the case are that the appellants herein are engaged in the manufacture of aluminium products viz. aluminium sprinkler pipes falling under Chapter 76 of the Schedule to the CETA 1985. Thy received aluminium ingots either from local manufacturers such as HINDALCO, BALCO or they import the same on payment of appropriate duty of excise or additional duty of customs as the case may be. The process of manufacture is melting of the aluminium ingots in the furnace by adding thereto allowing material, and casting the molten aluminium into logs; such logs are cut into extrusion ingots which are round in shape; from such extrusion ingots, pipes are extruded. The appellants were also making billets by melting aluminium ingots, aluminium scrap obtained from local market and generated within the factory, aluminum scrap obtained from local market and generated within the factory, aluminium wire rods and other aluminium products and the duty demand on such billets is Rs.6,96,074/- which is not disputed by the assessees. The dispute pertains to extrusion ingots manufactured by melting aluminium ingots and adding alloying material. It is the case of the Department that this process of manufacture results in emergence of a new commercial commodity viz. billets and that the duty is payable on such billets also since they are used in the manufacture of agricultural sprinkler pipes which are exempt from duty in terms of Notification 180/88-CE dated 13.5.88 as amended.
3. We have heard Shri V.P.Goyal, learned Advocate who contends that the extrusion ingots which are also known as round ingots or billets are only a different from of the same taxable commodity viz. inwrought aluminium as ingots and, therefore, the process of conversion of ingots into extrusion ingots is (SIC) there is only not a process of manufacture as there is only a change in the shape or form of the product. In support of his contention that mere change of shape or form does not amount to manufacture, he relies upon the decision of the Apex Court in the case of Telengana Steel Industries vs. State of Andhra Pradesh reported in 1994 (73) ELT 513 (SC) wherein it as held that wire rods and wire are not different taxable commodities for the purpose of levy of sales tax and the decisions of the Tribunal in the case of M/s.Bothra Metal Industries vs. CCE, Vadodara reported in 1998 (99) ELT 120 wherein it has been held that the process of pickling/cold rolling/hotrolling/annealing, cold/cold drawing of duty paid copper strips and wires does not amount to manufacture as the process does not bring into existence any new commodity and Puran Mal Bansal vs. Commissioner of Central Excise reported in 2000 (122) ELT 690 wherein it has been held that the process of drawing wire rom thicker gauge to thinner gauge does not amount to manufacture and that the difference in definition of "rods" and "wires" in Notes 1 (d) to Chapter 74 relates to the form i.e. whether in coil or not/ and M/s.Premier Winding Wires and Conductors vs. CCE reported in 2000 (115)ELT 698 wherein the Tribunal held that redrawing of wires in coil form does not amount to manufacture since the inputs, being in coil form, cannot be considered as copper bars or rods under Note 1(d) to Chapter 74 of the Tariff.
4. Learned DR however contends that billets are different commercial commodities having different chemical composition from ingots, having different physical features and having a different use. He submits that while the ingots cannot be extruded, billets are used for extrusion. He further submits that since ingots and billets are separately indicated in Tariff Heading 76.01, they are to be considered as different commodities for the purpose of levy of excise duty. He relies upon the decision of the Supreme Court in the case of T.V. Lak Anwar vs. State of Tamil Nadu reported in AIR 1998 SC 518 wherein the Supreme Court considered the decision in the case of Telengana Steel and held that dressed hides and skin and raw hides and skin are different commodities, although these were in the same Sub-heading. He also relies upon the decision of the Apex Court in the case of Decorative Laminates reported in 1996 (86) ELT 186 to support the argument that the process of conversion of aluminium ingots into billets amount to manufacture.
5. We have carefully considered the rival submissions. The appellants undertake the process of melting of ingots in order to obtain ingots in round shape for the purpose of facilitating extrusion, as it is suitable for extrusion only when it is cast in a round shape. As seen from the definition of ingots in "Words and Phrases of Central Excise and Customs" by S.B. Sarkar, ingot is "a metal casting of a shape suitable for subsequent hot working e.e. rolling, while the same book defines billets as a "small bar of metal - semi finished solid product which has been hot worked by extrusion, forging and rolling". This substantiates the appellants' contention that the product in dispute is only ingot in round form which is suitable for further hot working i.e. by the process of extrusion. Hence the product in dispute continues to be inwrought aluminium although the shape has been changed to round shape. Reading of HSN Explanatory Notes under Heading 76.01 at page 1156 would clearly show that the ingots and billets are inwrought aluminium in liquid state, in blocks ingots, billets, slabs, notched bars, wire bars or similar forms obtained by casting electrolytic aluminium or by remelting metal waste or scrap. These goods are generally intended for rolling, foraging, drawing, extruding hammers or for remelting and for casting into shaped articles" (emphasis supplied). In the present case, the disputed product has not been obtained by remelting waste ans scrap, but melting ingots. The stand of the appellants that the billets are aluminium extrusion ingots is further supported by technical literature in the form of the book "Aluminium Casting - Principle" by W Fortune Smith (presented by the American Society for Metals) wherein aluminium extrusion ingot ils referred to as billets. We, therefore, see force in the submissions of the appellants that the process carried out be them of melting (SIC)ingots into round ingots for the purpose of extrusion does not amount to manufacture and that the taxable commodity is the same, although in a different form. Mere change in physical form of shape or substance does not amount to manufacture.The case law cited by the learned Counsel supports our finding. It is also pertinent to note that as per IS Standards 4026-1987, the chemical composition of ingots and billets is the same viz. aluminium, silicon, iron, copper, titanium, vanadium, manganese, zirconium and chromium in different percentages.
6. In the light of the above discussion, we hold that the process of conversion of ingots into round ingots by melting, undertaken by the appellants, does not amount to manufacture and that no duty liability arises. Hence we set aside the impugned order and allow the appeal.