H.R. Syiem, Member (T)

1. This appeal has been dismissed for default by order No. 322/86-B1 dated 5-6-1986, under Rule 20 of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules 1982. The appellants have now applied for restoration of their appeal, submitting that there had been no wilful negligence by them when they did not appear on 5-6-1986. They say they are quite serious about the appeal but due to illness they were not able to engage an advocate in time and entrust the case to him to represent them. They also had difficulty in getting a train ticket, it being summer season.

2. Considering all facts and circumstances, we restored the appeal to its original number and proceeded to hear it.

3. On behalf of M/s Srinivasa Metal Industries, Mr. Rao's main point was that the circles were cut from duty paid aluminium strips, and since circles and strips fell in the same sub-item, no duty would be leviable on the circles. Furthermore, the circles came into being only as intermediate forms in the manufacture of utensils and were not sold by them or cleared by them from the factory. They were accordingly, not liable to duty.

4. Mr. Jain the learned counsel for the department said that a circle is a different goods obtained from the strip; it may be true that strip was duty paid, but as soon as circles are cut out of it, a new article came into being with a new name, a new character and a new use. Therefore, in keeping with various High Courts and Supreme Court rulings, the circles being a new manufacture as understood in section 2(f) of the Central Excises and Salt Act, it must pay duty as a fresh item. Furthermore, a "circle" is an item in the heading under item 27 of the Central Excises and Salt Act and strip is another. Therefore having been specifically named as a commodity under the tariff, it is natural and right that the circle, when it appears for the first time, from whatever raw material, should pay duty. He said that in the Hyderabad Asbestos case the New Delhi High Court ruled that when anything is named in the tariff it must, pay duty and that we need not go into the question of whether there has been a manufacture. There is no dispute that the circles had been made.

5. In accordance with Rule 9 and Rule 49 of the Central Excises and Salt Act, and their retrospective amendment, all intermediate cases should pay duty whether they are cleared or not. These circles may not have been cleared, but that will not protect them from paying duty. In support of his arguments he quoted MANU/KA/0397/1986 : 1986 (24) ELT 507 - MANU/CE/0106/1984 : 1984 (18) ELT 319 (Tribunal).

6. Unfortunately the department's case is based on very thin ground; that is, that cutting of the sheets into circles has brought in a new manufacture. This may well be so, but excisability does not follow. Excisability follows only when the duty has not been paid and this is a lesson that we learn from the classic judgments of the Supreme Court in Delhi Cloth Mill and South Bihar Sugar Mill. In the Delhi Cloth Mill case, the oil was disqualified from entry into the duty item, because it had not undergone all the processes that would qualify it for the entry. The oil had never paid that duty before, which it would have paid had it entered the item. The Hon'ble Supreme Court's injunction must not be understood to mean that a manufacture means excisability. Manufacture carries excisability only when the article produced or manufactured enters an item and attracts that duty for the first time, never having paid that duty, in any other form or shape. To repeat, excisability is relevant only when fitting a product into, an item it had never been fitted into before. It follows accordingly that if the product has been in that item, has been charged duty under that item, in whatever form, it would never have to pay that duty again. To change the statement a little, as long as the product, whatever its changes in form and shape, remains in the item