1. Whether crushing limestone into chips of desired sizes by screening amounts to manufacture for excise duty. (Para 1 )
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2002 Supreme(SC) 500
Supreme Court Of India
S.P. Bharucha, CJI., N. SANTOSH HEGDE AND SHIVARAJ V. PATIL, JJ.
S.N. SUNDERSON (MINERALS) LTD. AND ANOTHER
Versus
SUPDT.(PREVENTIVE), CENTRAL EXCISE AND OTHERS, ..Respondent
Civil Appeal No. 4712 of 1995
Decided on April 16, 2002
The emergence of a new marketable product constitutes manufacture under excise law. Furthermore, appellate courts will not consider arguments or factual perspectives that were not properly raised before the appropriate tribunals or recorded and answered by the lower court.
Headnote:(A) Central Excise - Concept of manufacture - Whether crushing of limestone lumps into chips of specific sizes by screening amounts to manufacture - Emergence of a new marketable product constitutes manufacture - Where appellants failed to challenge the issue before the appropriate authorities or tribunal and did not place the process in the proper perspective before the High Court, the conclusion on the aspect of manufacture is not liable to be interfered with. (Paras 1-2)
(B) Appeal - Scope of interference - Where High Court quashed penalty on ground of bona fide belief but did not answer argument regarding duty demand under Section II-A - Party should have approached the High Court in review for arguments not recorded or answered - Only arguments recorded by the High Court and answered require consideration by the appellate court. (Para 3)
Facts of the case:
The appellants were engaged in crushing limestone lumps into chips of specific sizes. The High Court held that the resulting product was a new marketable product, thus constituting manufacture. While the High Court quashed the penalty imposed by the authority on the basis of a bona fide belief, it did not strike down the demand for duty under Section II-A.
Findings of Court:
The court found no reason to interfere with the High Court's decision regarding manufacture as the appellants had not properly approached the appropriate tribunal or placed facts in the proper perspective. Regarding the duty demand, the court held that since the argument was not recorded or answered by the High Court, the appropriate remedy for the appellants was to seek a review in the High Court.
Issues: Whether the process of crushing limestone into chips amounts to manufacture and whether the quashing of a penalty based on bona fide belief necessitates the striking down of the duty demand.
Ratio Decidendi: The emergence of a new marketable product through a process constitutes manufacture. Appellate courts will not entertain arguments or factual perspectives that were not properly raised before the appropriate administrative tribunals or recorded and answered by the court below.
Result: Appeal dismissed with costs.
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Table of Contents
2. Appellants argued that relevant judgments on crushing limestone were not considered by the High Court. (Para 1 , 2 )
3. The court found no reason to interfere with the High Court's conclusion on the aspect of manufacture. (Para 2 )
4. The emergence of a new marketable product can amount to manufacture. (Para 1 )
5. Appeal dismissed with costs. (Para 4 )
6. Does crushing limestone into chips of desired sizes amount to manufacture?
Yes, the emergence of a new marketable product, namely, limestone chips of specific size, amounts to manufacture. (Para 1 )
7. Should the High Court have answered the argument regarding the demand of duty under Section II-A?
No, because the argument was not recorded or answered by the High Court; the appellants should have sought review. (Para 3 )
ORDER
1. The first point that is argued before us is in regard to whether the crushing of limestone by the appellants into limestone chips of desired sizes by screening amounts to manufacture. The appellants did not carry the matter before the Excise Authorities to the Tribunal, which would have been the appropriate place to decide whether the process employed by the appellants amounted to manufacture, but approached the High Court directly and the High Court came to the conclusion that the emergence of a new marketable product, namely, limestone chips of specific size amounted to manufacture.
2. It is contended before us that the High Court did not consider the judgments that related to the crushing of limestone lumps to obtain limestone chips. Judgments lay down law. The law is to be applied to facts. What the facts are has not been allowed to be placed in the proper perspective. It was for the appellants to have approached the High Court, set out their process of crushing before it and obtained its decision as to whether it amounted to manufacture or not. As it is, there is no reason to interfere with the order of the High Court on the aspect of manufacture.
3. The next argument is that the High Court quashed the penalty imposed by the Collector, Central Excise, upon the appellants taking the view that the appellants were under a bona fide belief that they were not liable to pay excise duty on limestone chips. It is submitted that the High Court should, therefore, have also struck down the demand of duty based on Section II-A. We have gone through the judgment of the High Court. We find that no such argument is recorded by the High Court or answered. If it was the contention of the appellants that the High Court had not answered an argument that had been advanced before it, they should have approached the High Court in review. As it is, we are of the view that only the arguments recorded by the High Court and answered require our consideration.
4. The appeal is dismissed with costs.
Court Masters
