Judgment

M. Srinivasan, J.-The common question which arises for decision in these two appeals and Special Leave Petition is whether printing on glass bottles amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act 1944.

2. It is convenient to set out the facts in each case separately before considering the aforesaid question.

3. The appellants in Civil Appeal No. 767 of 1991 have a factory for manufacturing glass and glasswares falling under T.1. 23 of the Cen­tral Excise Tariff. Till 1983 they were manufacturing and supplying plain glass bottles to customers. In 1983 they filed an application before the Assistant Collector, Central Excise, Saharanpur enclosing a revised layout of the factory in substitution of the existing plan. Under the revised plan, the premises in which the manufacturing opera­tion of glass and glassware was undertaken was segregated from the premises in which the machinery for printing of glass bottles with ceramic colour was to be installed for carrying on the printing opera­tion. The Superintendent, (Central Excise) approved of the revised plan. The appellants commenced the process of printing of bottles in the separate demarcated Unit for which no Excise License was taken. The said demarcated unit is situated within a shed enclosed by walls separate from the main factory which is licenced for manufacturing glass and glassware. The Range Superintendent of Central Excise issued a directive vide letter dated 29.6.1983 that the appellants shall not remove any printed bottles without payment of Central Excise duty on the enhanced value after including the expenditure incurred on printing/decorating. That was challenged by appellants on appeal before the Collector (Appeals) who set aside the directive and directed the Assistant Collector to pass a speaking order after complying with the principles of natural justice. After a show cause notice and a reply thereto, the Assistant Collector passed an order on 23.9.1983 that assessable value of glass bottles should include the cost of decorat­ing the same with ceramic colours. On appeal the Collector confirmed the same by his order dated 3.3.1984. The Tribunal dismissed the appeal preferred by the appellants by its order dated 26.10.1990. It is that order which is under challenge in this appeal.

4. Though the Tribunal observed that the Superintendent of Central Excise was not competent to approve the revised ground plan, proceeded to discuss the question formulated above on the footing that the Unit wherein the decoration of glass bottles is being carried out is separate from the factory manufacturing the said bottles. The following passage in the order of the Tribunal is relevant in this regard:

“Admittedly, the ACL Unit is located in the enclosed space with an opening on the main road apart from the gate of the factory licensed for the manufacture of glassware. The shed in which the ACL. Unit is located, was also excluded from the lay out of the factory. From the above, it follows that the ACL. Unit, which was carved out of the old premises is a space covered by walls and is adjunct to the principal premises i.e. the licensed premises.”

Again the Tribunal has observed in Para 20 of its order that “admit­tedly the plain bottles are manufactured in the main premises and the printing and decoration is done in the premises adjunct to it”.

5. It is on the above factual premise the question stated above which was formulated by the Tribunal itself has to be considered. The Tribu­nal has proceeded to hold that printing and decoration would amount to manufacture within the meaning of Section 2(f) of the Act.

6. In Civil Appeal No. 2882 of 1993 the appellant is the Union of India. The respondent in that appeal is none other than the appellant in Civil Appeal No. 767 of 1991. That appeal arises out of a claim for refund made by the respondents therein on the ground that they had paid excise duty on the charges incurred for printing of glass bottles w