Full Judgment Text
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PETITIONER:
NARNE TULAMAN MANUFACTURES PVT. LTD. HYDERABAD
Vs.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE, HYDERABAD
DATE OF JUDGMENT15/09/1988
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
KANIA, M.H.
RANGNATHAN, S.
CITATION:
1989 AIR 79 1988 SCR Supl. (3) 1
1989 SCC (1) 172 JT 1988 (4) 1
1988 SCALE (2)1066
CITATOR INFO :
R 1992 SC1324 (18)
ACT:
Central Excises and Salt Act, 1944. Section 2(f)-
‘Manufacture means bringing into existence new goods--When
parts and end product separately dutiable-Both taxable.
HEADNOTE:
The appellant manufactured one of the three parts, i.e.,
Indicating system, required for the manufacture of
weighbridges, and after procuring the other two parts
brought the three components together at site, fitted and
assembled them together and thus created a new weighbridge.
The appellant challenged the excise duty levied on the
manufacture of weighbridges under the Central Excises and
Salt Act, 1944.
The appellant’s contention before the Customs, Excise
and Gold (Control) Appellate Tribunal was that it was
preparing only a part of the weighbridge which was dutiable
as a separate part, and that as a part of machine was liable
to duty then the whole end product should not be dutiable as
separate excise goods. The Tribunal held that by whatever
process it became a complete weighbridge, as long as a
weighbridge had been made and completed, duty had to be
paid. According to the Tribunal, though the parts were
themselves liable to excise duty, the complete machine was
also a new excisable Commodity.
Dismissing the appeal, it was,
HELD: (1) Section 2(f) of the Act provides an inclusive
definition and states that the word "manufacture" includes
any process incidental or ancillary to the completion of a
manufactured product. So any process by which an object
becomes new commercial Commodity, including any process
identical or ancillary to to the completion, would be
manufacture.[3C]
(2) Manufacture means bringing into existence new goods.
There must be transformation and a new and different article
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must emerge having a distinctive name, character or use.
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[3D-E]
Union of India v. Delhi Cloth Mills, [l963l Suppl. 1
S.C.R. 586; Allenburry Engineers (p) Ltd. v. Ramakrishna
Dalmia, [1973] 2 S.C.R. 257 and Idandas v. Anant Ramchandra
Phadke, [1981] 3 Scale 1790, referred to.
(3) If the end product is a separate product which comes
into being as a result of the endeavour and activity of the
appellant, then the appellant must be held to have
manufactured the said item. When parts and the end product
are separately dutiable- both are taxable. [4A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1335-36
of 1987.
From the Judgment and Order dated 3.10.1986 of the
Customs Excise and Gold (Control) Appellate Tribunal New
Delhi in appeal No. E 1568 & 1569/81-BI in Order No. 673/86-
BI.
A.S. Nambiar and B. Parthasarthi for the Appellant.
Kuldip Singh, Additional Solicitor General, A.K.
Srivastava and Mrs. Sushma Suri for the Respondents.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. These are appeals under section
35L of the Central Excises and Salt Act, 1944 (hereinafter
called ‘the Act’) arise from the decision of the Customs,
Excise and Gold (Control) Appellate Tribunal (CEGAT for
short), New Delhi. The question that fell for consideration
by the Tribunal is whether the appellant M/s. Narne Tulaman
Manufacturers Pvt. Ltd. manufactured weighbridges and as
such was liable to duty under the Act.
It appears that weighbridges consisted of three
different parts, namely, (1) Platform, (2) Load Cells and
(3) Indicating system. The contention of the appellant was
that he got the platform manufactured from other people. The
load cells were imported and the appellant only made the
indicator system. In other words, it was the case of the
appellant that it manufactured only the indicator system.
The question, that fell for the Tribunal’s determination is
whether the activity indisputably carried out by the
appellant amounted to manufacture and what does it
manufacture? It has been found that "the appellant brought
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the three components together at site, fitted and assembled
them together so that they can work as one machine and as
such the appellant manufactured and created a new
weighbridge". The aforesaid findings appear in paragraph 5
of the Tribunal’s order. That weighbridge had not been
excised before is not disputed. The term of the central
excise speaks of "weighbridge"; whenever weighbridges are
made, those weighbridges are subjected to duty as such. The
Tribunal held that by whatever process it became a complete
weighbridge as long as a weighbridge has been made and
completed, duty has to be paid. According to the Tribunal,
though the parts are themselves liable to excise duty and so
the complete machine is also a new excisable good. In view
of the well-settled principles, the excisable goods are
manufactured by the appellant. Section 2(f) of the Act
provides an inclusive definition and states that the word
"manufacture" includes any process incidental or ancillary
to the completion of a manufactured product. So any process
by which an object becomes new commercial goods, including
any process incidental or ancillary to the completion would
be manufacture. Manufacture means bringing into existence
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new goods. This Court observed in Union of India v. Delhi
Cloth Mills, [1963] Suppl. I S.C.R. 586 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 is necessary and
there must be transformation, a new and different article
must emerge having a distinctive name, character or use. The
question, therefore is whether the activity carried out by
the appellant of assembling the three Components of the
weighbridge brings into being complete weighbridge which was
a distinctive name, character or use. See also the
observations of this Court in Allenburry Engineers (p) Ltd.
Ramakrishna Dalmia & Ors., [1973] 2 S.C.R. 257 and Idandas
v. Ananat Ramachandra Phadke, [1981] 3 Scale 1790.
The appellant’s contention before the Tribunal was that
it was only preparing a part and that part is dutiable as a
separate part. The appellant, however, did the work of
assembling. As a result of the work of the appellant a new
product known in the market and known under the excise item
"weighbridge" comes into being. The appellant will become a
manufacturer of that product and as such liable to duty.
That is precisely what the Tribunal found on the facts of
the case. The appellant seems to have been obsessed by the
idea that as a part of machine is liable to duty then the
whole end product should not be dutiable as separate excise
goods. That is mistake, a part may be goods as known in the
excise laws and may be goods as known in the excise laws and
may be dutiable. The appellant in this case claims to have
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manufactured only the indicator system. If the indicator
system is a separate part and a duty had been paid on it and
if the rules so provide then the appellant may be entitled
to abatement under the rules. But if the end product is a
separate product which comes into being as a result of the
endeavour and activity of the appellant then the appellant
must be held to have manufactured the said item. When parts
and the end product are separately dutiable-both are
taxable.
In that view of the matter, the appellant’s case that it
is liable only for the component part and not the end
product cannot be entertained. The Tribunal was, therefore,
right in the view it took. These appeals have no merit and
are accordingly dismissed. This order will not prejudice the
rights of the appellant to claim, if any, abatement as
indicated before according to the rules if the appellant is
so entitled.
R.S.S. Appeals dismissed.
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