Commissioner of
Central Excise, Bombay Vs. M/S. Rajpurohit GMP India Ltd. & Ors. [2008]
INSC 1721 (14 October 2008)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.9277-9283 OF 2003
COMMNR. OF CENTRAL EXCISE, MUMBAI ...APPELLANT (S) VERSUS WITH
CIVIL APPEAL NOS. 10108-10112 OF 2003 CIVIL APPEAL NO. 3466 OF 2004 CIVIL
APPEAL NOS. 6331-6332 OF 2004 CIVIL APPEAL NOS. 7216-7218 OF 2004 CIVIL APPEAL
NO. 6705 OF 2004 ORDER The main issue which arises for determination in this
bunch of Civil Appeals filed by the Department is whether cutting and slitting
of steel sheets of polyester films used for lamination purposes amounts to
manufacture? In other words, in these Civil Appeals the issue is not on classification,
it is about eligibility.
On 7th September,
2001, a Circular was issued by the Central Board of Excise and Customs, New
Delhi, on the question as to whether slitting of HR/CR coils of iron and steel
sheets into strips would amount to manufacture. The matter was examined and the
Board came to the conclusion which is reproduced here in below:
"3. As far as
slitting of HR/CR coils of iron and steel into strips of smaller width is
concerned, two view points have been expressed by the field formations and the
trade. One view is that if as a result of slitting the classification of the
product changes from Heading 72.08/72.09 to 72.11/72.12 in respect of iron or
non-alloy steel strips and from Heading 72.19 to 72.20 in respect of stainless
steel strips, a new product with commercially distinct 2 name, character and
use has come into existence and hence the process would amount to manufacture.
4. Another view is
that mere slitting is not a process of manufacture.
The products before
and after slitting remain flat-rolled products and do not have new and distinct
identities. Thus, the activity should not amount to manufacture.
7. In the
circumstances, it is hereby clarified that cutting of HR/CR coils of iron or
non-alloy steel into sheets or slitting into strips of lesser width;
or slitting of sheets
into strips will amount to manufacture if the resultant product is classifiable
under different sub-heading of the Central Excise Tariff."
The said Circular
dated 7th September, 2001 was challenged before the Delhi High Court which took
the view that the processes in question did not amount to manufacture. The
Department's appeal to this Court was also dismissed. Consequently, the Central
Board of Excise and Customs issued another Circular which is the latter
Circular dated 2nd March, 2005 which reads as under:
"CIRCULAR:
811/8/2005-CX. DATED 02-MARCH-2005 Manufacture - Slitting of HR/CR coils of
Iron & Steel sheets not amounts to manufacture Circular
No.811/8/2005-CX.,dated2-3-2005 F.No.139/4/2002-CX-4 Government of India
Ministry of inance (Department of Revenue) Central Board of Excise &
Customs, New Delhi Subject : Whether slitting of HR/CR coils of Iron &
Steel sheets into strips would amount to manufacture - Reading.
I am directed to
invite your attention to Board's Circular No. 584/21/2001-CX., dated 7-9-2001
(2001 (133) E.L.T. T3) wherein it was clarified that cutting of HR/CR coils of
iron or non-alloy steel into sheets or slitting into strips of lesser width; of
slitting of sheets into strips will amount to manufacture if the resultant
product is classifiable under different sub- heading of the Central Excise
Tariff.
2. The said Circular
was quashed by the Hon'ble High Court of Delhi vide its order dated 21-11-2003,
[2004 (178) E.L.T. 1099 (Del.)] holding that these processes would not 3
amount to manufacture. Department's appeal filed against Delhi High Court Order
has been dismissed by Hon'ble Supreme Court.
3. In the light of
the judgment of the Apex Court the Circular No. 584/21/2001- CX., dated
7-9-2001 is withdrawn herewith.
4. Field formations
may be informed suitably.
5. Hindi version will
follow."
The later Circular
dated 2nd March, 2005 accepts the judgment of the Delhi High Court and
withdraws the earlier Circular dated 7th September, 2001. Thus, the position is
now made clear that cutting and slitting of steel sheets and polyester films
used for lamination purposes do not amount to manufacture according to Board
which is binding on the Department.
Shri Vikas Shrama
learned counsel appearing on behalf of the Department, however, contended
before us that in the present case the show cause notice alleges that sheets of
various sizes which emerged after the slitting process were again die-punched
on the press machine and the die-punched pieces were sealed by heat leaving
three sides open which, according to the learned counsel, amounted to
manufacture. It was urged that this aspect needs to be remitted by this Court
to the Adjudicating Authority for fresh consideration. We find no merit in this
argument for the simple reason that in these cases we are concerned with the
period up to 2001. At that time the previous Circular dated 7th September, 2001
held the field. That Circular was applied for the past period. That Circular
essentially proceeded on the basis of interpretation of the tariff items and
not on examination of the entire process undertaken by the assessees. In these
cases also show cause notice clearly indicates that the matter has proceeded
before the Adjudicating Authority not on examination of the process undertaken
by the assessee but on the basis of interpretation of the tariff items. In the
show 4 cause notice there is no allegation that the above process of
die-punching amounts to manufacture, hence we are not inclined to remit the
matter to the Adjudicating Authority.
As stated above, the
Circular dated 7th September, 2001 stands withdrawn by the subsequent Circular
dated 2nd March, 2005. Hence, we find not reason to interfere with the impugned
judgment of the Tribunal in these Civil Appeals. Accordingly, this bunch of
Civil Appeals stands dismissed with no order as to costs.
....................J.
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