Judgment

Kapadia, J.—The short question which arises for determination in these civil appeals filed by the assessee under section 35-L(b) of the Central Excise Act, 1944 (hereinafter referred to as “the Act”) is - whether there was value addition on account of galvanization includible in the assessable value of m.s. galvanized pipes. In these civil appeals, we are concerned with the period May 1994 to July 1996.

2. Appellant was engaged inter alia in the manufacture of m.s. galvanized pipes. These pipes were made from H.R. coils. The pipes emerging on hydro testing stage were pickled in acid, washed in running water and galvanized by dipping in molten zinc.

3. The appellant filed its classification list claiming that “galvanization” did not amount to manufacture. The appellant claimed that m.s. galvanized pipes were non-excisable goods, as the said pipes had been processed out of duty paid m.s. pipes manufactured in its factory. A show-cause notice was issued by the department stating that the appellant had cleared m.s. pipes without adding the cost of galvanization. Accordingly, the department alleged under-invoicing. According to the appellant, there were two sections in its factory