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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, DELHI
S.K. Bhatnagar, G.A. BRAHMA DEVA, JJ.
S.A.I.L. -Appellant
Versus
Collector of Central Excise -Respondent
Order No. 126/91-C E/Appeal No. 297/80-C, 126 of 1991, 297 of 1980
Decided On : 06-02-1991
S.K. Bhatnagar, Member (T)
1. This is an appeal against the order of Collector of Central Excise, Bolpur, dated 20-10-1989.
2. The learned counsel stated that the appellants receive lime stone from mines. A part of this 'lime stone' is crushed in a machine in order to make 'lime fine' required for production of 'sinter'.
3. A question has arisen whether this amounts to a process of manufacture and 'lime fine' was an excisable product.
4. It was their contention that crushing of lime stones into lime fine did not amount to manufacture and lime fine was not an excisable product. Hence, no duty was leviable.
5. The impugned order proceeds on the assumption that the Chapter Note 2 of Chapter 25 equates the processes mentioned therein with the 'manufacture' and consequently the process of converting of any of the products covered under Heading 25.01 to 25.05 constitutes "manufacture". However, Section 2(f) as it stood prior to 28-2-1986 defined the expression "manufacture" in an inclusive manner and included any process incidental or ancillary to the completion of a manufactured product. In the absence of any statutory definition, the expression "manufacture" was interpreted by the Supreme Court on the basis of dictionary meanings in several judgments to mean, to bring into existence a new commercial commodity having a distinctive name, characteristics and use.
6. The interpretation as based on Section 2(f) was in consonance with Entry 84 of the Union's list of the Constitution of India.
7. However, with effect from 28-2-1986, the definition has been substituted by Section 4 of the Central Excise Tariff Act, 1985 which reads as follows :-
"(f) "Manufacture" includes any process --
(i) incidental or ancillary to the completion of a manufactured product; and
(ii) which is specified in relation to any grade in the Section or Chapter Notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture;..."
Therefore, by an artificially extended definition of the word 'manufacture' the legislature has reserved upon itself power to equate any process with 'manufacture' by providing accordingly in the Section or Chapter Notes of the Schedule to the Central Excise Tariff Act, 1985.
8. In the facts of the case, Chapter Note 2 of Chapter 25 does not equate inter alia the "process of crushing" as amounting to manufacture "but merely enumerates the forms of products falling under Heading 28.01, 25.03 and 25.05 in which they can be taxed. Therefore, the Legislature has clearly not intended to equate process of crushing (which is not a process of manufacture as per the normal definition) as amounting to manufacture.
9. This becomes clear from a comparison of Chapter Note 2 of Chapter 25 with Chapter Note 2 of Chapter 9, Chapter Note 3 of Chapter 21, Chapter Note 2 of Chapter 24, Chapter Note 5 of Chapter 30, Chapter Note 6 of Chapter 32, Chapter Note 4 of Chapter 33, Chapter Note 6 of Chapter 39 and Chapter Note 2 of Chapter 83.
10. While in Chapter Note 2 of Chapter 25, it has not been expressly provided that the process (es) referred therein "shall amount to manufacture" in all the other Chapter Notes it has been expressly provided that the processes referred therein shall amount to manufacture in respect of specified goods. Thus, the Legislature has made an express provision wherever it has intended to extend the artificial definition.
11. Hence, Chapter Note 2 of Chapter 25 cannot be read in the manner suggested by the Collector. In fact, it does not render any assistance to hold that crushing of the lime stone in the fines constitutes manufacture.
12. It was also their contention that new and different goods having distinct commercial identity, use and characteristic did not emerge as a result of crushing. Further even as per common parlance test, processing in dispute is not manufacture.
13. The learned counsel further stated that in any case the demand is time barred in as much as they had been declaring lime fine in their cla
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