Per K.S. Venkataramani: Appellants herein are aggrieved by the Order dated 17.10.94 passed by the Collector of Central Excise and Customs, Indore. The appellants manufactured mild steel pipes and tubes falling under heading 73.06 of the Central Excise Tariff Act, 1985. About 30% of the production is cleared as black pipes and tubes on payment of duty under that heading and another 70% of the production, black pipes and tubes are subsequently galvanised in a separate section of the appellants' factory called galvanising shed. They also purchased black pipes from the market which were then galvanised and thereafter sold. The dispute herein relates to black pipes manufactured by the appellants that they themselves subsequently galvanized in their factory. The Collector in his order has held that though galvanisation has been held to be not amounting to manufacture yet the question in this case is whether galvanisation charges should be included in the assessable value of galvanised M.S. pipes sold by the appellants. The Collector noted that M.S. pipes which are formed in their tube mill are subjected to various process like grinding, threading, facing, lacquering and hydro testing. Some pipes are sold at this stage while the others subjected to a further process of galvanisation; the Collector noted the appellant's submissions that some value is added to the M.S. pipes in the process of galvanisation and that normal price of the galvanised M.S. pipes is higher than un galvanised pipes. The Collector found that galvanisation enriched the value of the goods and hence charges for the purpose should necessarily form part of the assessable value of the galvanised pipes in the light of the law laid down by the Supreme Court in the case of Bombay Tyre International, reported in 1983 ELT 1986 wherein it was held, inter alia, that expenses incurred on account of several factors which have contributed to the value of the excisable goods upto the date of its sale were liable to be included in the assessable value. It is against this order, the present appeal has been filed.

2. Shri V. Sridharan, learned Counsel has appeared for the appellants and Shri T.R.Malik, learned Senior Departmental Representative for the Respondent Collector. The contention of the appellants is that ungalvanised black pipes and tubes are themselves fully marketable goods and answering description under Tariff heading 73.06 which covers "other tubes, pipes and hollow profiles (for example, open seam or welded, riveted or similar closed) of iron or steel."The learned Counsel relied upon the Supreme Court decision in the case of J.K. Spinning & Weaving Mills Ltd. Vs. Union of India reported in 1987 (32) E.L.T. 234 (S.C.) wherein it has been held that yarn obtained at intermediate stage is liable to pay duty even if further used in an integrated process of weaving into fabric. It was held that yarn which is sized is liable to duty at the un sized stage. Similarly, the learned Counsel relied upon the Supreme Court decision in the case of Collector of Customs & Central Excise Vs. Oriental Timber Industries reported in 1985 (20) E.L.T. 202 to say that once black M.S. pipes answering the relevant tariff description have been removed on payment of duty no further duty is leviable thereon in the light of the above judicial decisions. The learned Counsel further urged that the Department itself recognised galvanisation is not amounting to manufacture in view of the judgement of the Supreme Court in the case reported in 1989 (42) E.L.T. 513 and Tribunal judgement reported in 1989 (39) E.L.T. 437. The Department also admits that if the ungalvanised pipes have been purchased from outside and only galvanisation was done, no duty will be attracted. In such a view of the matter, the learned Counsel argued that when once M.S. black pipes emerged in their factory as fully manufactured products and are cleared on payment of duty, no further demand can be made on the same goods.

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