H.R. Syiem, Member (T)

1. This is an appeal on behalf of M/s. R.S. Steel Works against the order of the Appellate Collector of Central Excise, New Delhi, No. O/MRT/CE/81 undated. M/s. R.S. Steel Works subject MS sections and angles received on behalf of M/s. U.P. Electricity Board to the processes of cutting, sizing, galvanizing and punching etc. The Appellate Collector held that M/s. R.S. Steel Works had manufactured new goods since, according to him, they also erected towers for which they manufactured the components. He came to the conclusion that M/s. R.S. Steel Works manufactured towers by referring to a contract No. ETDC/TD/50(A) which was for design, fabrication and galvanizing, painting of towers.

2. The appellants maintain that the Appellate Collector was mistaken to refer to this contract, because it had not been signed. He himself referred to the contract as a draft contract. The appellants maintain that they received MS angles which they subject to the process of cutting, galvanizing, punching etc. These sections after punching and other work, are used by the Electricity Board in the erection of transmission tower. They maintain that the actual erection of the towers was done by M/s. Best Crompton and other firms. The central excise, however, suggested that what was removed from M/s. R.S. Steel Works were transmission towers in CKD condition.

3. The learned counsel for M/s. R.S. Steel Works argued that the sections cut, sized and punched by them can at best be component parts of tower. He quoted order of the Tribunal in MANU/CE/0058/1986 : 1986 (24) ELT 671 - Bridge Roof Co. (I) Ltd. v. C.C.E., Calcutta.

4. The learned counsel for the department quoted MANU/TN/0127/1980 : 1980 (6) ELT 775 (Mad.) - Brakes India Ltd. v. Supdt. of C.E., Madras, and argued that if trimming, cutting, chamfering could result in manufacture of brake shoes, then the cutting, sizing by M/s. R.S. Steel Works of the MS sections much also be understood to be a manufacture. She also quoted MANU/SC/0419/1976 : 1983 (13) ELT 1582 and Tribunal's order No. 239/86-B1 - Mittal Industries when the Tribunal judged that the sugar vertical crystallizer erected in a sugar factory was excisable and would have to pay duty.

5. The learned counsel for the appellants, however, said that the identity of the MS angles has not been lost and they remained MS angles even though they may have been cut, sized and punched. He quoted MANU/CE/0247/1985 : 1986 (24) ELT 113, Bombay Foods.

6. It is difficult to see how the sizing and cutting of the MS angles and sections would change their character into a new product. That they go to make a transmission tower is true, but that will not make the transmission tower an article like sugar crystallizer which is a manufacturing machinery made out of sections of steel and various other components like electric motors and formed into a new and distinct commodity, a sugar crystallizer, very different from the steel sheets, angles and sections, motors, engines from which the crystallizer is formed. The sugar crystallizer was, in fact, manufactured as a complete machinery in a factory which specialised in the manufacture of such crystallizers and involved total change. Some of the steel sheets for example had to be bent, shaped and welded to form the body of the crystallizer. The resultant tank-like structure has no likeness to the raw materials from which it was made e.g. the steel sheets. The steel sheets lost their identity as sheets to become the tank; the sheets can no longer be seen. It is not so in the case of the goods that M/s. R.S. Steel Works turned out. The MS angles and sections may have been cut and drilled but they can still be seen as MS angles and their utility is always as steel angles. Even when they form component parts of the transmission tower, they do so as steel angles, because in that shape they possess a strength that is special to steel angles. To cut them, size them, punch them and galvanize them only