Full Judgment Text
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PETITIONER:
COLLECTOR OF CENTRAL EXCISE, MADRAS.
Vs.
RESPONDENT:
KUTTY FLUSH DOORS & FURNITURE CO. (P) LTD.
DATE OF JUDGMENT28/03/1988
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
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.
HEADNOTE:
%
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
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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.
JUDGMENT:
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
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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.
366