Railway sleepers, sawn timber, and wooden sawn sizes are manufactured goods and, therefore, excisable goods under the Central Excises and Salt Act, 1944.

Headnote:
EXCISE - LEVY - RAILWAY SLEEPERS, SAWN TIMBER, WOODEN SAWN SIZES - WHETHER MANUFACTURED GOODS - YES - EXCISABLE GOODS - YES - CENTRAL EXCISES AND SALT ACT, 1944, SEC. 3, 11-A, CENTRAL EXCISE RULES, 1944, R. 9(2).
Fact of the Case:

The petitioner, a government corporation engaged in the business of taking forest lease and converting logs into timber, challenged the orders of the Central Excise Authority levying excise duty on railway sleepers, sawn timber, and wooden sawn sizes.
Finding of the Court:

The court held that railway sleepers, sawn timber, and wooden sawn sizes are distinct commercial goods exigible to excise duty under the Central Excises and Salt Act, 1944, Section 3, read with Rule 9(2) of the Central Excise Rules, 1944.
Issues: Whether railway sleepers, sawn timber, and wooden sawn sizes are manufactured goods and, therefore, excisable goods.
Ratio Decidendi: The court interpreted the term "manufacture" in Section 2(f) of the Central Excises and Salt Act, 1944, and held that it includes any process incidental or ancillary to the completion of a manufactured product. The court further held that railway sleepers, sawn timber, and wooden sawn sizes are distinct commercial goods with different names, characters, and uses, and are, therefore, manufactured goods.
Final Decision: The court dismissed the writ petitions filed by the petitioner, upholding the orders of the Central Excise Authority levying excise duty on railway sleepers, sawn timber, and wooden sawn sizes.

JUDGMENT :

R.K. Patra, J. - The facts in all the aforementioned cases are few, point involved is solitary it being whether railway sleepers, sawn timber and wooden sawn sizes are tiber simpliciter or they are "manufactured" as such as excisable goods to be leviable with duty u/s 3 of the Central Excises and Salt Act, 1944. As all the cases stem from common and similar orders passed by the Central Excise Authority, they have been heard together and are being disposed of by this common judgment.

2. The petitioner is a Government corporation which is engaged inter alia in the business of taking forest lease and conversion of logs into timber and dispose of the same through its different agencies. The Collector, Central Excise and Customs, Bhubaneswar issued notice to the petitioner to show cause as to why it should not be levied with central excise on the afore-mentioned goods for different periods specified in the notices. The petitioner instead of replying to the said notices prayed for personal hearing which was granted by the designated authority. After hearing the petitioner, the authority has held that excise duty is leviable on railway sleepers, sawn timber, wooden sawn sizes u/s 11-A of the aforesaid Act read with Rule 9(2) of the Central Excise Rules, 1944 for different periods covering from 28-2-1988 to 2-4-1988 as per Annexure-1 of each of the writ petitions. This has led the petitioner to challenge the orders in this group of writ petitions.

3. Mr. B.K. Mohanty, learned Senior Counsel has submitted that the goods in question to be leviable with excise duty must be manufactured as envisaged u/s 3 of the Central Excises and Salt Act, 1944 and the petitioner who merely gets the legs converted to railway sleepers, sawn timber and wooden sawn sizes does not manufacture them as such. Learned Counsel has contended that "manufacture" results in emergence of a different article and asked us to accept that railway sleepers, sawn timbers and wooden sawn sizes converted from timber continue as timber they do not lose their character as timber. Shri A.B. Misra, learned Counsel for the Revenue, on the other hand, has refuted this contention raised on behalf of the petitioner and submitted that the goods in question are distinct commodities in the market for which they are subjected to levy of duty as per relevant items mentioned in the schedule.

4. Section 3 of the Central Excise and Salt Act, 1944 which is the charging section provides that there shall be levied and collected duties of excise on all excisable goods other then salt, which are produced or "manufactured" in India at the rates set froth in the Schedule to the Central Excise Tariff Act, 1985 (Central Act No. 5 of 1986). The said Central Act No. 5 of 1986 has come into force on 28th of February, 1986. Prior to the said date, duty on excisable goods was leviable at the rates specified in the Schedule of the Central Excises and Salt Act, 1944. There is no dispute at the Bar that prior to 28-2-1986 the goods in question were sought to be brought under the residuary item 68 of the Schedule. In the Schedule of the Central Act No. 5 of 1986 the following entries under the distinct heading nos. 44.02 and 44.03 find mention:

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Heading Sub- Description of goods Rate

No. heading of

No. duty

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1 2 3 4

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44.08 4402.00 RAILWAY OR TRAMWAY SLEEPERS 12%

(CROSS-TIES),WHETHER IMPREGNATED

OR NOT.

44.03 4403.00 WOOD, SAWN OR CHIPPED LENGTH-WISE, 12%

SLICED OR PEELED WHETHER OR NOT PLANED,