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PETITIONER: COLLECTOR OF CENTRAL EXCISE, MADRAS.

       Vs.

RESPONDENT: KUTTY FLUSH DOORS & FURNITURE CO. (P) LTD.

DATE OF JUDGMENT28/03/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1988 AIR 1164            1988 SCR  (3) 363  1988 SCC  Supl.  239     JT 1988 (2)    93  1988 SCALE  (1)705

ACT:      Central Excises  and Salt  Act, 1944:  Section 35L  and Tariff Item  No. 68-Timber  logs sawn into sizes-Whether new product  emerges-Whether  excise  duty  becomes  chargeable- Concept of ’manufacture’-What is.      Words and Phrases: ’Manufacture’-Meaning of.

HEADNOTE: %      The respondent  firm filed a classification list before the Assistant  Collector, Excise,  and sought  approval  for treating sawn  timber and  dried timber  as non-excisable on the ground  that sawing  of timber  logs into  sizes did not amount to  manufacture. The  Assistant Collector  held  that conversion of the timber logs into sawn timber satisfied the conditions of  manufacture since it involved transformation, whereby a  new and different article with the distinct name, character or  use, which was different from the timber logs, emerged, and,  therefore, excise  duty  was  leviable  under Tariff Item  68. On appeal, the Collector concurred with the Assistant Collector.  Allowing the appeal of the respondent, the Customs,  Excise and  Gold (Control)  Appellate Tribunal held that  no new  product emerged  by sawing of timber into several sizes. Hence the appeal by the Revenue under Section 35(L) of the Central Excises and Salt Act, 1944.      Dismissing the appeal by the State, ^      HELD: 1.1  Excise duty  becomes chargeable  only when a new and  different article  emerges having  a distinct name, character and use. This is a question of fact depending upon the relevant  material whether,  as a  result of activity, a new and  different article  emerges having  a distinct name, character and use. [365B-D]      1.2 ’Manufacture’ implies a change, but every change is not manufacture  and yet  every change  of an article is the result of  treatment, labour and manipulation. But something more was  necessary and  there must be transformation; a new and different  article must  emerge having  a distinct name, character or use. [365E-F] 364      Having regard to the facts of the case, as found by the

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Tribunal which  was the  final fact  finding  authority  and regard being  had to  the  principles  for  determining  the questions which  were correctly applied by the Tribunal, the conclusion of  the Tribunal  that no  new product emerged by sawing of  timber into several sizes is unassailable. [365F- G]      Union of  India v.  Delhi Cloth General Mills, [1963] 1 Suppl.  SCR   586;  Allenburry   Engineers  Pvt.   Ltd.   v. Ramakrishna Dalmia  & Ors.,  [1973] 2  SCR 257  and State of Orissa &  Ors. v.  The Titaghur Paper Mills Co. Ltd. & Anr., [1985] 3 SCR 26, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 468 of 1988.      From the Order dated 7.7.1987 of the Customs Excise and Gold (Control)  Appellate Tribunal,  New Delhi in Appeal No. 383/83-D.      G. Ramaswami,  Additional Solicitor  General, Ms.  Indu Malhotra and Mrs. Sushma Suri, for the Appellant.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI, J. This is an appeal under Section 35L(b) of the Central Excise and Salt Act, 1944 (hereinafter called ’the  Act’). The appeal is directed against the Order of the  Customs Excise and Gold (Control) Appellate Tribunal (hereinafter called ’the CEGAT’).      The respondent  herein filed  a classification  list on 16th March,  1982 seeking  approval of Sawn timber and dried timber as  non-excisable. The  submission of  the respondent was that timber logs were only sawn into sizes and these did not tantamount  to any  manufacture. However,  the Assistant Collector, Madras,  held that  the conversion of timber logs into sawn  timber satisfied  the conditions  of  manufacture insofar as  the conversion  of timber  logs into sawn timber involves transformation  whereby a new and different article with the  distinct name,  character or  use emerges which is different from  timber logs.  It was  held accordingly  that excise duty  @ 8%  ad valorem  under Tariff  Item 68  of the erstwhile Central Excise Tariff was leviable.      The respondent  filed an appeal before the Collector of Appeals who concurred with the Assistant Collector upholding the duty.  Aggrieved thereby  the respondent filed an appeal before the CEGAT. 365 The Tribunal  in the  Judgment under  appeal, relied  on its decision in  the case of Sanghvi Enterprises, Jammu, Tawi v. Collector of  Central Excise, Chandigarh, [1984] Vol. 16 ELT 317 and  the Karnataka  High Court in the case of Y. Moideen Kunhi &  Ors. v.  Collector of  Central Excise,  Bangalore & Ors., [1986] Vol. 23 ELT 293 and came to the conclusion that no new  product emerges  by sawing  of timber  into  several sizes. In  the premises  the Tribunal  allowed the appeal of the respondent. Hence, this appeal.      It is  well-settled that excise-duty becomes chargeable only when  a new  and different  article  emerges  having  a distinct name, character and use. See in this connection the observations of  this Court in Union of India v. Delhi Cloth & General  Mills, [1963]  1 Suppl.  SCR 586  and South Bihar Sugar Mills  Ltd. etc.  v. Union  of India Ors. [1968] 3 SCR 21. This  principle is  well-settled. This  is a question of fact depending  upon the  relevant  material  whether  as  a result of  activity, a  new and  different  article  emerges having a  distinct name,  character  and  use.  The  use  of

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expression  ’manufacture’  was  explained  in  the  case  of Allenburry Engineers Pvt. Ltd. v. Ramakrishna Dalmia & Ors., [1973] 2  SCR 257. In State of Orissa & Ors. v. The Titaghur Paper Mills  Co. Ltd.  & Anr.,  [1985] 3  SCR 26 which was a decision on  the Orissa  Sales Tax  Act, this  question  was considered in the background of the fact whether planks, cut into sizes, etc., sawed out of logs, are different from logs in its nascent state.      It may be worthwhile to note that ’manufacture’ implies a change,  but every change is not manufacture and yet every change of  an article is the result of treatment, labour and manipulation. But  something more  was necessary  and  there must be  transformation; a  new and  different article  must emerge having  a distinct  name, character or use. See Union of India  v. Delhi  Cloth Mills  (supra) at  page 596 of the report. Having regard to the facts found in this case by the Tribunal,  which   ultimately  is  the  final  fact  finding authority, we  are of  the opinion  that regard being had to the principles  for determining  the  questions  which  were correctly applied  in the  decision of  the Tribunal, in the facts of  this case,  the  conclusion  of  the  Tribunal  is unassailable.      In the  premises there  is no  merit in this appeal and the same is accordingly dismissed. N.P.V.                                     Appeal dismissed. 366