India & Ors. Vs. M/S Alembic Glass Indust. Ltd. & ANR.  INSC 437
(6 May 2010)
APPELLATE JURISDICTION CIVIL APPEAL NOS. 3889-3891 OF 2003 Union of India &
Ors. -- Appellants VERSUS M/s Alembic Glass Industries Ltd. & --
appeals, by special leave, are directed against the final judgment and order
dated 23rd January 2002 delivered by the High Court of Gujarat at Ahmedabad in
Special Civil Application No.2528 of 1984. By the impugned judgment, the High
court has quashed orders dated 11th May, 1984 and 14th May, 1984 whereby the
Assistant Collector had cancelled the approved price list and the revised
ground plan respectively as also the consequential show cause notices issued to
the respondent - assessee. While deciding the appeals in favour of the
assessee, the High Court has placed reliance on the decision 2 Industries Ltd.
assessee carries on the business of manufacturing glassware as also the process
of colour printing and decoration of the glassware so manufactured. It appears
that based on trade notice No.MP/24/80 dated 8th February 1980, which in turn
was based on tariff advice No.2/80 dated 4th January 1980, the assessee pleaded
that the activity of printing and decorating glassware, already manufactured,
in a separate factory did not amount to "manufacture" and, therefore,
the value in relation to the said process would not be includible for the
purpose of levy of Excise duty. It was argued that unless the said process
brings into existence a different commercial product, it cannot be said to be a
manufacturing process. It was also asserted that the printing unit was separate
from the main unit manufacturing the glassware. A revised ground plan was
placed before the competent authority on 18th May, 1983. On 1st June, 1983, the
assessee also obtained a separate licence under the Factories Act, 1948 for the
decorating unit. On 2nd June 1983, the revised ground plan was approved by the
competent 1 (1998) 2 SCC 32 3 authority and on 7th July, 1983, the fresh price
list was provisionally approved with effect from 3rd June, 1983. The competent
authority, after conducting enquiry finally approved the fresh price list on
7th October, 1983.
May, 1984, the same authority who had approved the price list and the revised
ground plan cancelled the approval of the price list. On 14th May, 1984, the
approval of the revised ground plan was also cancelled.
aggrieved, the assessee challenged the said two orders before the High Court by
way of a writ petition. As stated above, the High Court, following the decision
of this Court in J.G. Glass Industries Ltd. and others (supra) has allowed the
petition and set aside both the said orders. Aggrieved thereby, the revenue is
before us in these appeals.
heard learned counsel for the parties.
Bhatt, learned senior counsel appearing on behalf of the revenue, has submitted
that since in the present case the assessee had taken the matter directly to
the High Court by way of a writ petition, the High Court accepted the stand of
the 4 assessee that the activity of decoration etc. was being carried out in a
separate premises without any verification of the stand of the assessee.
Learned counsel thus, contends that the ratio of the decision of this Court in
J.G. Glass Industries Ltd. and others (supra) is not applicable on the facts of
the present case.
unable to persuade ourselves to agree with learned counsel for the revenue.
to decide whether or not a process amounts to "manufacture" within
the meaning of Section 2 (f) of the Central Excise And Salt Act, 1944 (as it
then existed), in J.G. Glass Industries Ltd. and others (supra), this Court
laid down a two- fold test, viz., (1) whether by the said process a different
commercial commodity comes into existence or the identity of the original
commodity ceases to exist; and (2) whether the commodity which was already in
existence will serve no purpose but for the said process. In other words,
whether the commodity already in existence will be of no commercial use but for
the said process. Applying the said two-fold test, the Court held that the
plain bottles were themselves commercial commodities and could be sold and used
as such. By the process of printing names or 5 logos on the bottles, the basic
character of the commodity does not change. They continue to be bottles and,
therefore, it cannot be said that but for the process of printing, the bottles
will serve no purpose or are of no commercial use. However, while holding so,
the Court drew a distinction between a case where the printing on the bottles
was also carried out in the same factory where the bottles were manufactured
and a case where the printing on the bottles was being carried out in a
finally held that if the printing and decoration etc. on such bottles was
carried out in a premises different from that in which the bottles were
manufactured, the value of the printing will not be includible while
determining the assessable value of the excisable goods for computing the
present case, it is clear from the impugned judgment that for accepting the
stand of the assessee that it had a separate unit for carrying out the process
of decoration etc. on the glassware, the High Court has taken note of the fact
that the four show cause notices issued after 21st May, 1984, pertained to the
period during which the goods were cleared by the assessee under the price list
finally approved on 7th October 1983, in 6 respect of a sesparate unit for
which revised ground plan was submitted and approved. This fact was not
disputed by the revenue before the High Court. In that view of the matter, no
fault can be found with the decision of the High Court, holding that the issue
stood concluded by the aforementioned decision of this Court.
the appeals, being devoid of any merit, are dismissed leaving the parties to
bear their own costs.
........................................J. [D.K. JAIN]
........................................J. [P. SATHASIVAM]
........................................J. [AFTAB ALAM]
MAY 06, 2010.