S.D. Jha, J.

1. The appellants had filed this Revision application against the Order-in-Original dt. 9-6-1982, passed by Sh. K.S. Dilipsinhji, Collector of Central Excise, Bombay, before the Central Board of Excise Customs, which stands transferred to the Tribunal to be disposed of as an appeal filed before it. By the said order, the learned Collector of Central Excise, Bombay-1 (hereinafter called Collector) confirmed the demand of Rs. 18,53,063.20 paise on 'Aluminium Circles' falling under T.I. 27(b) of the Central Excise Tariff on the appellants.

2. Facts material for decision of this appeal are : that appellants are engaged in the manufacture of Aluminium Utensils/Containers. For the purpose of manufacturing such products, they cut out Aluminium Circles falling under T.I. 27(b) from Aluminium Sheets also falling under the same sub-tariff item i.e. 27(b). It appears that before 1970, in such a situation no excise duty was collected at the stage of manufacture of Circles and at that time duty was not ad valorem but was specific i.e. on weight basis. Central Excise duty on this item was partly ad valoremised in 1970. The appellants were not paying duty at the stage of Circles but were paying duty at the final product stage that is aluminium utensils. They were also not following the procedure laid down under Rule 56A of the Central Excise Rules, 1944 (hereinafter called Rules). The appellants claim that for doing so they were relying on a clarification given by the Collector of Central Excise, Bombay vide his communication dated 5-4-1961, addressed to the appellants' subsidiary concern M/s. Metal Rolling Works Private Ltd. The said communication related to Copper Sheets and Circles. It was clarified 'that manufacturers, who are only making Circles out of duty paid sheets would not be required to pay duty again on Circles cut out from such duty paid sheets. Sometimes in 1976, the Excise authorities on verification found that the appellants had manufactured and cleared Hindalium and Aluminium Circles weighing 403533 kgs. valued at Rs. 50,64,339.15 and 3,12,791.800 kgs. valued at Rs. 37,84,780.78 respectively. The Assistant Collector of Central Excise, Bombay Division-II issued a show cause notice dated 24-11-1976 to the appellants alleging contravention of Rules and called upon them to show cause why duty on Circles be not recovered and penalty imposed. The appellants filed reply denying the allegations. The Collector after complying with usual procedure by his Order No. V-Adj. (27) 15-3/76, dt. 7-10-1980, confirmed the demand of Rs. 41,12,707.80 paise and also imposed penalty of Rs. 40,000 on the appellants. The appellants challenged this order before the Central Board of Excise Customs, New Delhi. The Board by its order dated 25-3-1981, with certain observations set aside the order of the Collector and remanded the matter to him for fresh adjudication. The Collector then allowed the appellants to make further submissions and also granted them personal hearing. The Collector by the impugned order 9-6-1982 demanded duty of Rs. 18,53,063.20 paise from the appellants, which he said was worked out by the appellants themselves. He, however, refrained from imposing any penalty. Aggrieved with the order, the appellants have filed the present appeal to the Central Board of Excise Customs, which is before us.

3. First contention urged by Sh. E.R. Srikantia, learned Consultant for the appellants is that cutting out 'Circles' out of duty paid 'Sheets' does not constitute manufacture in the Excise sense and no liability for duty arises. He submitted that the relevant Tariff Item 27(b) of the Central Excise Tariff at the material time read "Manufactures, the following, namely, plates, sheets, circles, strips, shapes and sections, in any form or size, not otherwise specified". He submitted so long as goods remained within the same sub-item, it cannot be said that 'manufacture' has taken place from the Excise point of view. The inten