Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Sae (India) Ltd. on 14 January, 1992
Equivalent citations: 1993(66)ELT212(TRI-DEL)
ORDER S.V. Maruthi, Member (J)
1. The issue involved in these cases is whether the process, namely, cutting, welding, punching, galvanising of duty paid angles, channels, flats etc. of iron and steel amounts to manufacture.
2. The relevant facts are, the respondents purchase duty-paid M.S. angles and flats etc. of specified sizes punch/drill and galvanise them. These M.S. angles are cleared from the factory as such and subsequently they are used in the power transmission tower at sites. They filed classification list No. 40/86-87 with effect from 1-3-1986 and classification list No. 126/87-88 with effect from 1-4-1987 and claimed the classification of the above products under Tariff Item 7210.10 on the ground that the process, namely, punching, drilling and galvanising does not amount to manufacture and therefore, the duty leviable is nil. The Asstt. Collector disagreed with appellants and classified the product under TI 7308.90 where the duty leviable is 15% ad valorem. On appeal, the Collector agreed with the respondents following the order of this Tribunal in the respondent's own case in SAE India Ltd. v. CCE, Indore in its Order No. 254-259/88, dt. 13-5-1988. It was held in the said case that punching, drilling and galvanising does not amount to manufacture. Hence, the department is in appeal before us.
3. The main contention of Shri Arora, JDR is that there is a conflict of opinion between the order of this Tribunal in Aruna Industries v. CCE 1986 (25) E.L.T. 580 (Tri.) relied upon by the Collector and the order in Structural and Machineries (Bokaro) Pvt. Ltd. v. CCE, Patna reported in 1984 (17) E.L.T. 127 and order of this Tribunal in Richardson Cruddas v. CCE reported in 1988 (38) E.L.T. 176 and therefore the matter should be referred to a Larger Bench.
4. The counsel appearing for the respondent submitted that the issue is finally decided by this tribunal in their own case and also in various other cases that mere punching, drilling and galvanising does not only amount to manufacture and therefore there is no necessity to make a reference to the Larger Bench.
5. We may refer to the two orders which according to Shri Arora are in conflict with the views expressed by this Tribunal in Aruna Industries (supra). The two orders are Structural and Machineries (Bokaro) Pvt. Ltd. and Richardson and Cruddas (supra). In Structural and Machineries the issue before the Tribunal was whether the processes carried out on structural steel plates and flats, namely, cutting to sizes, drilling (enabling bolting) welding (to facilitate further assembly at erection sites) and applying shop paint (to prevent rusting during storage) amounts to manufacture. The Tribunal on a consideration of the terms of the rate contract and the design and specifications observed that the appellants transport raw steel from Bokaro Steel Plant and maintain an account which means that they have to perform processes on raw steels. It was observed by this Tribunal that if the work carried out in isolation by the appellants one may lead to conclude that it does not constitute to manufacture but since the work carried on by the appellants is of highly intricate specialised and technical nature it amounts to manufacture.
6. The decision in Structural and Machineries was followed in Richardson and Cruddas (supra). The facts relevant are that the appellants out of duty-paid iron and steel products, such as plates, angles etc. subject them to the process of cutting and welding and rivetting etc. The question is whether it amounts to manufacture. The Tribunal held that it amounts to manufacture. While holding as above they relied upon the findings given by the Asstt. Collector. We may refer to the findings given by the Asstt. Collector in his order which are as follows :
"The nature of job done by the Co. cannot 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 customers 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 structural required by the customers".
7. In other words, the findings of the Asstt. Collector that cutting, welding and drilling is part of a single cutting operation, and the whole operation is taken into account while holding that the process amounts to manufacture.
8. We may also point out that the order of this Tribunal in Richardson and Cruddas is the subject matter of an appeal before the Supreme Court -1990 (45) E.L.T. 67A.
9. As against the above order this Tribunal in Ajit India Pvt. Ltd. v. CCE 1985 (19) E.L.T. 541 and in Aruna Industries v. CCE (supra) it was held that cutting, welding and drilling does not amount to manufacture. The order of this Tribunal in Aruna Industries was followed by this Tribunal in appellant's own case (supra) and in Steel Authority of India Ltd. v. CCE -1988 (36) E.L.T. 360, Pratap Steel Rolling Mills v. CCE [Order No. 6/90-B1 and various other orders -1990 (48) E.L.T. 539 (Tri.)].
10. We may point out that the order of this Tribunal in Structural and Machineries which was followed in Richardson and Cruddas is distinguishable from the order of this Tribunal in Aruna Industries. In the order of Structural and Machineries this Tribunal has taken into account the process performed form of raw steel till the finished product came into existence and held that it amounted to manufacture. Though they have not elaborated or referred to or specified the nature of process performed. In our view the process performed are not only cutting, drilling and welding and painting but they are a part of process carried on by the appellants on raw steel.
11. The above order is followed in Richardson and Cruddas. Since the order in Richardson and Cruddas is the subject matter of an appeal before the Supreme Court, the correctness of the said order is in dispute and no finality can be given to it. Further, the Asstt. Collector has categorically enumerated the process carried on by the appellants in the said order. We, therefore, are of the view that these two orders are distinguishable from the order in Aruna Industries. We may also point out that in Aruna Industries it was categorically held that the cutting of steel plates, drilling of holes, rivetting or fastening are not parts from which one could hold that the identity of the original product was lost and a transformation had taken place. We may now refer to the facts of the present case. In the present case, the respondents purchase duty-paid M.S. angles and flats of specified sizes, punch/drill and galvanise them and clear them from the factory directly. There is neither a finding nor evidence that raw steel is purchased by the respondents and subject it to various processes or they carry on processes which are highly intricate, specialised and technical in nature. Therefore, the facts of the present case are covered by the order of this Tribunal in Aruna Industries.
12. The fact that in the appellant's own case this Tribunal in order No. 254-259/88, dt. 13-5-1988 1988 (36) E.L.T. 613 (Tri.) following the order in Aruna Industries held that cutting, welding, punching and galvanising of duty paid angles etc. does not amount to manufacture, is not disputed. Therefore, following the order of this Tribunal in the respondent's own case, we do not consider it appropriate to refer the matter to a larger Bench.
13. Appeals are thus dismissed in view of the Tribunal order mentioned above.
Sd/- Sd/- Sd/- (S.V. Maruthi) (EC. Jain) (P.K. Kapoor) Member (J) Member (T) Member (T) Dt. 6-1-1992.
Having regard to the reasoning in para 12 of my learned Sister's order I do not find any merit in the appeals and dismiss them accordingly.