Collector
of Central Excise, Madras. Vs. Kutty Flush Doors &
Furniture Co. (P) Ltd. [1988] INSC 86 (28 March 1988)
Mukharji,
Sabyasachi (J) Mukharji, Sabyasachi (J) Rangnathan, S.
CITATION:
1988 AIR 1164 1988 SCR (3) 363 1988 SCC Supl. 239 JT 1988 (2) 93 1988 SCALE
(1)705
ACT:
Central
Excises and Salt Act, 1944: Section 35L and Tariff Item No. 68-Timber logs sawn
into sizes-Whether new product emerges-Whether excise duty becomes chargeable-
Concept of 'manufacture'-What is.
Words
and Phrases: 'Manufacture'-Meaning of.
HEAD NOTE:
% The
respondent firm filed a classification list before the Assistant Collector,
Excise, and sought approval for treating sawn timber and dried timber as
non-excisable on the ground that sawing of timber logs into sizes did not
amount to manufacture. The Assistant Collector held that conversion of the
timber logs into sawn timber satisfied the conditions of manufacture since it
involved transformation, whereby a new and different article with the distinct
name, character or use, which was different from the timber logs, emerged, and,
therefore, excise duty was leviable under Tariff Item 68. On appeal, the
Collector concurred with the Assistant Collector. Allowing the appeal of the
respondent, the Customs, Excise and Gold (Control) Appellate Tribunal held that
no new product emerged by sawing of timber into several sizes. Hence the appeal
by the Revenue under Section 35(L) of the Central Excises and Salt Act, 1944.
Dismissing
the appeal by the State, ^
HELD:
1.1 Excise duty becomes chargeable only when a new and different article
emerges having a distinct name, character and use. This is a question of fact
depending upon the relevant material whether, as a result of activity, a new
and different article emerges having a distinct name, character and use.
[365B-D]
1.2
'Manufacture' implies a change, but every change is not manufacture and yet
every change of an article is the result of treatment, labour and manipulation.
But something more was necessary and there must be transformation; a new and
different article must emerge having a distinct name, character or use.
[365E-F] 364 Having regard to the facts of the case, as found by the Tribunal
which was the final fact finding authority and regard being had to the
principles for determining the questions which were correctly applied by the
Tribunal, the conclusion of the Tribunal that no new product emerged by sawing
of timber into several sizes is unassailable. [365F- G] Union of India v. Delhi
Cloth General Mills, [1963] 1 Suppl. SCR 586; Allenburry Engineers Pvt. Ltd. v.
Ramakrishna Dalmia & Ors., [1973] 2 SCR 257 and State of Orissa & Ors.
v. The Titaghur Paper Mills Co. Ltd. & Anr.,
[1985] 3 SCR 26, referred to.
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 468 of 1988.
From the
Order dated 7.7.1987 of the Customs Excise and Gold (Control) Appellate
Tribunal, New Delhi in Appeal No. 383/83-D.
G. Ramaswami,
Additional Solicitor General, Ms. Indu Malhotra and Mrs. Sushma Suri, for the
Appellant.
The
Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an
appeal under Section 35L(b) of the Central Excise and Salt Act, 1944
(hereinafter called 'the Act'). The appeal is directed against the Order of the
Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called 'the
CEGAT').
The
respondent herein filed a classification list on 16th March, 1982 seeking approval of Sawn timber and dried timber as
non-excisable. The submission of the respondent was that timber logs were only
sawn into sizes and these did not tantamount to any manufacture. However, the
Assistant Collector, Madras, held that the conversion of timber logs into sawn
timber satisfied the conditions of manufacture insofar as the conversion of
timber logs into sawn timber involves transformation whereby a new and
different article with the distinct name, character or use emerges which is
different from timber logs. It was held accordingly that excise duty @ 8% ad valorem
under Tariff Item 68 of the erstwhile Central Excise Tariff was leviable.
The
respondent filed an appeal before the Collector of Appeals who concurred with
the Assistant Collector upholding the duty. Aggrieved thereby the respondent
filed an appeal before the CEGAT.
365
The Tribunal in the Judgment under appeal, relied on its decision in the case
of Sanghvi Enterprises, Jammu, Tawi v. Collector of Central
Excise, Chandigarh, [1984] Vol. 16 ELT 317 and the Karnataka High Court in the
case of Y. Moideen Kunhi & Ors. v. Collector of Central Excise, Bangalore
& Ors., [1986] Vol. 23 ELT 293 and came to the conclusion that no new
product emerges by sawing of timber into several sizes. In the premises the
Tribunal allowed the appeal of the respondent. Hence, this appeal.
It is
well-settled that excise-duty becomes chargeable only when a new and different
article emerges having a distinct name, character and use. See in this
connection the observations of this Court in Union of India v. Delhi Cloth
& General Mills, [1963] 1 Suppl. SCR 586 and South Bihar Sugar Mills Ltd.
etc. v. Union of India Ors. [1968] 3 SCR
21.
This principle is well-settled. This is a question of fact depending upon the
relevant material whether as a result of activity, a new and different article
emerges having a distinct name, character and use. The use of expression
'manufacture' was explained in the case of Allenburry Engineers Pvt. Ltd. v.
Ramakrishna Dalmia & Ors., [1973] 2 SCR 257. In State of Orissa & Ors. v. The Titaghur Paper
Mills Co. Ltd. & Anr., [1985] 3 SCR 26 which was a decision on the Orissa
Sales Tax Act, this question was considered in the background of the fact
whether planks, cut into sizes, etc., sawed out of logs, are different from
logs in its nascent state.
It may
be worthwhile to note that 'manufacture' implies a change, but every change is not
manufacture and yet every change of an article is the result of treatment, labour
and manipulation. But something more was necessary and there must be
transformation; a new and different article must emerge having a distinct name,
character or use. See Union of India v. Delhi Cloth Mills (supra) at page 596
of the report. Having regard to the facts found in this case by the Tribunal,
which ultimately is the final fact finding authority, we are of the opinion
that regard being had to the principles for determining the questions which
were correctly applied in the decision of the Tribunal, in the facts of this
case, the conclusion of the Tribunal is unassailable.
In the
premises there is no merit in this appeal and the same is accordingly
dismissed.
N.P.V.
Appeal dismissed.
Back