Per Shri V.P. Gulati :

The issue in the appeal relates to includibility of the costs incurred towards cutting described as rebate cutting by the Collector (Appeals). Painting and external lipping vision hole cutting & fixation of kick plate are required to be added for the purpose of arriving at the assessable value of the doors which are manufactured by the appellants. The appellants are manufacturers of flush doors falling under tariff heading 16 (B) of the Central Excise Tariff. The appellants in para 2 of the appeal memorandum have set out the processes carried out for the manufacture of the flush doors and the percentage of doors which are sold without the kick plate, vision hole cutting, rebate cutting and external lipping. The said para 2 is reproduced below for convenience of reference :-

"The manufacturing process of flush door is as follows :

First a timber frame of required dimensions is made with rails and stiles. They are enclosed by the frame is filled with wooden strips laid side by side. Two or three layers of veneers are pressed on each side of the core with an adhesive stratum between two layers in a hydraulic hot press. The doors are then cut to required size bringing them to full shape, sanded and got ready". As soon as the above process is complete the flush door comes into existence and duty is paid on the assessable value of these flush doors. The appellants sell at the factory gate about 90% of doors in the above condition.

In some stray cases the customers place special orders for which the appellants make kick plate, vision hole cutting, rebate cutting and external lipping on the manufactured flush doors. The charges for these services rendered are being collected separately from the respective customers."

The processes of kick plate fixing, vision hole cutting, rebate cutting and external lipping are described by them as under :-

(a) Kick Plate Fixing :

According to the customer's orders a plastic laminate of about 6" height is affixed on to the bottom of the manufactured flush door so that any kicking of the door does not damage the door and floor washing does not spoil the door.

(b) Vision Hole Cutting :

After the flush door is completely manufactured, when specific orders are placed by the customers an opening for glazing is provided. Here a portion of the door at the appropriate place is cut and removed so that a glazing panel can be fixed. The vision hole enables a person to view another person on the other side of the door. This is occasionally asked for some of the front doors etc., only.

(c) Rebate Cutting :

Most of the doors are in single leaf. Where the door is wider, the customers may order them in two pieces. In such cases, the rebating is done on the flush door which is already manufactured. On the flush door, an edge is cut so as to give an inclined or square shape so that the door can overlap with another door.

(d) External Lipping :

This is a job done on a door after it reaches full shape. A small piece of timber caller reaper is fixed on all or on the specific edges of the door. This is done manually for the purpose of protecting the edges of the door.

2. Arguing on behalf of the appellants, Shri Lakshmi Kumaran, learned Counsel pleaded that after manufacture of flush doors, in some cases, to suit the needs of the particular customers, they provide key holes and also lipping on the outside of the doors at the bottom. He has pleaded that 99% of the goods were sold without these additional features and only in respect of one per cent of the goods these additional features were added. In this context he has pleaded that flush doors chargeable to excise duty came into existence as soon as the same were ready for clearance in the condition in which 99% of the goods were sold. Embelishment done subsequent to that at a stage after that stage of the manufacture could not be charged to duty. In this connection he referred us to the decision of the Hon'ble Supreme Court in the case of CCE Vs. Orien