Customs, Excise and Gold Tribunal - Delhi
Ugar Sugar Works Ltd. vs Collector Of Central Excise on 13 February, 1990
Equivalent citations: 1990ECR318(TRI.-DELHI), 1990(47)ELT561(TRI-DEL)
ORDER Harish Chander, Member (J)
1. M/s. Ugar Sugar Works Ltd. Ugarkhurd, District Belgaum, Karnataka, have filed an appeal being aggrieved from the order passed by the Collector of Central Excise (Appeals), Madras. The issue to be decided is:
Whether regrooving of sugar mill rollers and grooving of re-shelled mill rollers amount to manufacture?
The revenue authorities had classified the same under Tariff Item 68. The adjudicating authority as well as the appellate authority had taken the view that after grooving of the re-shelled shaft, the sugar mill roller emerged and the lower authorities had taken the view that grooving of re-shelled shaft amounted to manufacture.
2. Shri V.D. Kale, the learned consultant has appeared on behalf of the appellant. He has reiterated the facts. In support of his argument he has cited the following judgments :-
(1) 1984 (17) E.L.T. 568 Collector of Central Excise, Patna v.
Saran Engineering Co. Ltd., Bihar Manufacture - Repairing and reconditioning is distinct from manufacture - Reshelling of roller shafts does not amount to manufacture as envisaged under Section 2(f) of the Central Excises Act, hence no duty leviable.
(2) 1985 (20) E.L.T. 251 Saraswati Industrial Syndicate Ltd.
v.
Union of India and Others Manufacture - Repairing, reconditioning (reshelling) of the old worn out sugar Mill Rollers does not amount to manufacture and is not liable to duty under Item 68 of the Central Excise Tariff - Application of number of processes during repairing or reconditioning immaterial.
Shri Kale has argued that grooving of the reshelled roller shafts does not amount to manufacture and only job work is involved. He has also cited another judgment in the case of Lathia Industrial Supplies Co. Pvt. Ltd. v. Collector of Central Excise, Baroda reported in 1987 (29) E.L.T. 751 (S.C.) "Re-rubberising and relining of old and used rollers does not amount to manufacture both before and after 14-8-1986." Shri Kale, the learned consultant, pleaded that in view of the case law cited by him, the appeal may be allowed.
3. Shri M.S.Arora, the learned JDR who has appeared on behalf of the respondent, has relied on the orders passed by the lower authorities and has referred to the reply to the show cause notice which appears on pages 40 to 42 of the paper book. He has pleaded that regrooving and grooving is a complete process. In support of his argument, he has referred to a judgment of the Tribunal reported in 1985 (21) E.L.T. 562 in the case of Uday Textile Engineering Works, Bombay v. Collector of Central Excise, Bombay and has laid emphasis on para No. 7 of the judgment where the Tribunal had held that in engraving designs on the copper print roll no manufacture takes place - Burden is on the revenue to prove that manufacture has taken place - Unless manufacture is shown demand cannot be raised.
4. We have heard both the sides and have gone through the facts and circumstances of the case. The old and used, worn out grooved sugar mill rollers are being sent out from the factory and are returned to the parent factory after the process of reshelling. The rollers have already suffered duty under Tariff Item 68. The appellant is doing the business of grooving of the sugar mill rollers which have already been reshelled. The appellant's case is fully covered by the Punjab and Haryana High Court judgment in the case of Saraswati Industrial Syndicate Ltd. v. Union of India and Others reported in 1985 (20) E.L.T. 251. Para Nos. 7, 8, 9, 10 and 11 of the judgment are reproduced below :-
"7. If these tests are applied then it cannot legitimately be said that the petitioner manufactures the Sugar Mill Rollers. The old and worn out Sugar Mill Rollers are received by the petitioner. The outer case shell is broken. The resultant cast iron is melted. A requisite quantity of the metal is added thereto and the same is cast into a shell which is mounted on the shaft. This roller is then machined and grooved. No doubt, the old roller passes through a number of processes and suffers from series of changes, but ultimately what emerges is a Sugar Mill Roller. The only change made is that unserviceable roller is turned into a roller which can be used in a Sugar Mill Roller. However, no new or distinct article emerges. Commercially the old and worn out roller is also known as Sugar Mill Roller. Similar is the position of the Sugar Mill Roller which is delivered to the customer after its reconditioning. The plea of Shri H.S. Brar that the old worn out roller is only an iron scrap and is a distinct commodity from a serviceable roller, is not acceptable. Any article which is rendered unserviceable by its use does not change its nature or character. It remains the same and is known by the same name in the commercial world. When it is repaired or reconditioned, no new commercial commodity comes into being. Even after undergoing a degree of processing it still retains its original identity.
8. Mr. Brar argued that after the deshelling of the cast iron shell, a shaft is left. That shaft is a distinct article. By a number of processes, this is turned into a serviceable Sugar Mill Roller which is entirely different from the shaft. This argument cannot be accepted because it is based on a wrong premise. The petitioner does not receive shafts of rollers from the customers. What is received is a worn out Sugar Mill Roller. So, this article is reconditioned and made serviceable. It is not the shaft that is handed over to the petitioner for being turned into a serviceable Sugar Mill Roller. If that were so, then perhaps the process will be manufactured. That is not the position. The petitioner only reconditions the old worn out rollers.
9. Even if it be accepted that the shell which is ultimately mounted on the shaft is manufactured by the petitioner, even then this process will not suffer any excise duty. The shell is only an intermediate product. The customer does not place order for the manufacture of shell. The shell is not sold separately in the market.
10. In a recent case the Bombay High Court in Century Spinning and Manufacturing Company Ltd. v. Union of India -1981 (8) E.L.T. 676 held that merely because the worn out spinnerettes were melted or repaired, it cannot be said that new product was manufactured, which was liable to payment of duty. It could not be said that the spinnerettes had lost their identity because of melting or repairing abroad and had become a different product.
11. For the foregoing reasons, the reconditioning of old worn out Sugar Mill Roller does not amount to manufacture as envisaged in the Act and the Schedule and the question posed in the very beginning of the writ petition is answered in the negative. I further hold that the petitioner is not liable to pay excise duty on reconditioning of old worn out Sugar Mill Rollers. I quash the impugned orders (Annexures P-7, P-9, P-15 and P-20). There shall be no order as to costs."
The earlier orders of the Tribunal and the observations of the Hon'ble Supreme Court in the case of Lathia Industrial Supplies Co. Pvt. Ltd. v. Collector of Central Excise, Baroda reported in 1987 (29) E.L.T. 751 (S.C.) also fully support the appellant's case. We are of the view that no manufacturing activity is involved.
5. In view of the above discussion, we set aside the impugned order and allow the appeal. The revenue authorities are directed to give consequential effect to this order.