Judgment

PATHAK, J.:- This appeal by certificate granted by the High Court of Allahabad raises the question whether the manufacture of aluminium cans or torch bodies is liable to excise duty under Entry 27(e) of the First Schedule to the Central Excises and Salt Act, 1944.

2. The appellant, The Union Carbide India Limited, is a public limited company and carries on the business of the manufacture and sale of flashlights (torches), dry cell batteries, chemicals and plastics. The flashlights are manufactured by one of its Divisions, the Eveready Flashlight Company, Lucknow. The appellant purchases aluminium slugs from the manufacturers of aluminium in India and produces alummium cans or torch bodies at its factory by a process of extrusion. Before March 1, 1970 aluminium cans were subjected to basic excise duty at 20 per cent ad valorem plus special duty at 20 per cent of the basic duty on a value of Rs. 8,600/- per metric tonne fixed as the tariff value by the Government of India by a Notification dated Jan. 21, 1969. By an amendment incorporated in the Finance Act 1970 with effect from March 1, 1970 the basic duty was fixed at 25 per cent ad valorem plus special duty at 20 per cent of the basic duty. By Notification No. 65/70 dated March 1, 1970 the Notification of Jan. 21, 1969 was rescinded.

3. The appellant received a letter dated March 3, 1970 from the Superintendent of Central Excise, Lucknow stating that the tariff rate of duty on extruded shapes and sections of aluminium had been raised and that aluminium cans would be subjected to duty on ad valorem basis on the value as determined under Sec. 4 of the Act, and that the appellant should send price lists for approval. The appellant, anxious to avoid coercive action, filed price declarations in which the price of aluminium cans was calculated as the cost of production plus a margin of profit of 5 per cent of the cost. The appellant, however, took the position that aluminium cans were neither sold nor were capable of being sold in the market, and therefore could not be described as goods for the purposes of the Central Excises and Salt Act, 1944. It was also asserted that the preparation of aluminium cans out of aluminium slugs did not amount to manufacture, and that aluminium cans were merely an intermediate product in the manufacture of flashlights. The contentions of the appellant did not find favour with the excise authorities.

4. The appellant filed a writ petition in the High Court of Allahabad for a mandamus directing the excise authorities not to levy and collect excise duty on aluminium cans, and to refund the excise duty levied and collected from the appellant on aluminium cans from March 1, 1965. A learned single Judge of the High Court allowed the writ petition by his judgment and order dated April 15, 1971 but on appeal by the Union of India a Division Bench of the High Court reversed the judgment and order of the learned single Judge and dismissed the writ petition on February 22, 1972. Before the learned Judges an attempt was made by the appellant to show that the process employed in the preparation of the aluminium cans could not be described as a process of "extrusion" but in fact should properly be described as a process of "impact extrusion". The learned Judges were not impressed by the distinction attempted by the appellant and held that the manufacture of the aluminium cans fell under entry 27(e) of the First Schedule to the Central Excises and Salt Act, 1944, which refers to "extruded shapes and sections including extruded pipes and tubes". The learned Judges pointed out further that even otherwise the aluminium cans would fall under entry 27(d) which mentions "pipes, and tubes other than extruded pipes and tubes", and inasmuch as the rate of duty was the same the point raised by the appellant was of no significance. The learned Judges also held that the production of aluminium cans from aluminium slugs amounted to manufacture and that the aluminium cans