Full Judgment Text
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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.9277-9283 OF 2003
COMMNR. OF CENTRAL EXCISE, MUMBAI ...APPELLANT (S)
VERSUS
M/S RAJPUROHIT GMP INDIA LTD. & ORS. ...RESPONDENT(S)
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
O R D E R
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 exigibility.
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On 7 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 hereinbelow:
“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
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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.”
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The said Circular dated 7 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
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Excise and Customs issued another Circular which is the latter Circular dated 2 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
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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.”
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The later Circular dated 2 March, 2005 accepts the judgment of the Delhi High
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Court and withdraws the earlier Circular dated 7 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
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the period up to 2001. At that time the previous Circular dated 7 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
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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.
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As stated above, the Circular dated 7 September, 2001 stands withdrawn by the
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subsequent Circular dated 2 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.
[ S.H. KAPADIA ]
New Delhi, ....................J
October 14, 2008 [ B. SUDERSHAN REDDY ]