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PETITIONER: NARNE TULAMAN MANUFACTURES PVT. LTD. HYDERABAD

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, HYDERABAD

DATE OF JUDGMENT15/09/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) KANIA, M.H. RANGNATHAN, S.

CITATION:  1989 AIR   79            1988 SCR  Supl. (3)   1  1989 SCC  (1) 172        JT 1988 (4)     1  1988 SCALE  (2)1066  CITATOR INFO :  R          1992 SC1324  (18)

ACT:     Central  Excises  and  Salt  Act,  1944.  Section  2(f)- ‘Manufacture  means bringing into existence new  goods--When parts and end product separately dutiable-Both taxable.

HEADNOTE:     The appellant manufactured one of the three parts, i.e., Indicating   system,   required  for  the   manufacture   of weighbridges,  and  after  procuring  the  other  two  parts brought  the three components together at site,  fitted  and assembled them together and thus created a new  weighbridge. The  appellant  challenged  the excise duty  levied  on  the manufacture  of weighbridges under the Central  Excises  and Salt Act, 1944.     The  appellant’s contention before the  Customs,  Excise and  Gold  (Control)  Appellate Tribunal  was  that  it  was preparing only a part of the weighbridge which was  dutiable as a separate part, and that as a part of machine was liable to duty then the whole end product should not be dutiable as separate  excise goods. The Tribunal held that  by  whatever process  it  became  a complete weighbridge, as  long  as  a weighbridge  had  been made and completed, duty  had  to  be paid.  According  to  the Tribunal, though  the  parts  were themselves  liable to excise duty, the complete machine  was also a new excisable Commodity.     Dismissing the appeal, it was,     HELD: (1) Section 2(f) of the Act provides an  inclusive definition  and states that the word "manufacture"  includes any  process incidental or ancillary to the completion of  a manufactured  product.  So any process by  which  an  object becomes  new  commercial Commodity,  including  any  process identical  or  ancillary  to to  the  completion,  would  be manufacture.[3C]     (2) Manufacture means bringing into existence new goods. There must be transformation and a new and different article                                                     PG NO 1                                                     PG NO 2 must  emerge  having a distinctive name, character  or  use.

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[3D-E]     Union  of  India v. Delhi Cloth Mills, [l963l  Suppl.  1 S.C.R.  586;  Allenburry Engineers (p) Ltd.  v.  Ramakrishna Dalmia, [1973] 2 S.C.R. 257 and Idandas v. Anant  Ramchandra Phadke, [1981] 3 Scale 1790, referred to.     (3) If the end product is a separate product which comes into being as a result of the endeavour and activity of  the appellant,   then  the  appellant  must  be  held  to   have manufactured  the said item. When parts and the end  product are separately dutiable- both are taxable. [4A-B]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1335-36 of 1987.     From  the  Judgment  and Order dated  3.10.1986  of  the Customs  Excise  and Gold (Control) Appellate  Tribunal  New Delhi in appeal No. E 1568 & 1569/81-BI in Order No. 673/86- BI.     A.S. Nambiar and B. Parthasarthi for the Appellant.     Kuldip   Singh,  Additional  Solicitor   General,   A.K. Srivastava and Mrs. Sushma Suri for the Respondents.     The Judgment of the Court was delivered by     SABYASACHI MUKHARJI, J. These are appeals under  section 35L  of the Central Excises and Salt Act, 1944  (hereinafter called  ‘the Act’) arise from the decision of  the  Customs, Excise  and  Gold (Control) Appellate  Tribunal  (CEGAT  for short), New Delhi. The question that fell for  consideration by the Tribunal is whether the appellant M/s. Narne  Tulaman Manufacturers  Pvt.  Ltd. manufactured weighbridges  and  as such was liable to duty under the Act.     It   appears  that  weighbridges  consisted   of   three different  parts, namely, (1) Platform, (2) Load  Cells  and (3)  Indicating system. The contention of the appellant  was that he got the platform manufactured from other people. The load  cells  were imported and the appellant only  made  the indicator  system.  In other words, it was the case  of  the appellant  that it manufactured only the  indicator  system. The question, that fell for the Tribunal’s determination  is whether  the  activity  indisputably  carried  out  by   the appellant   amounted  to  manufacture  and  what   does   it manufacture?  It has been found that "the appellant  brought                                                     PG NO 3 the three components together at site, fitted and  assembled them  together so that they can work as one machine  and  as such   the   appellant  manufactured  and  created   a   new weighbridge".  The aforesaid findings appear in paragraph  5 of  the  Tribunal’s  order. That weighbridge  had  not  been excised  before  is not disputed. The term  of  the  central excise  speaks of "weighbridge"; whenever  weighbridges  are made, those weighbridges are subjected to duty as such.  The Tribunal held that by whatever process it became a  complete weighbridge  as  long  as a weighbridge has  been  made  and completed,  duty has to be paid. According to the  Tribunal, though the parts are themselves liable to excise duty and so the  complete machine is also a new excisable good. In  view of  the  well-settled principles, the  excisable  goods  are manufactured  by  the  appellant. Section 2(f)  of  the  Act provides  an inclusive definition and states that  the  word "manufacture"  includes any process incidental or  ancillary to the completion of a manufactured product. So any  process by  which an object becomes new commercial goods,  including any process incidental or ancillary to the completion  would be  manufacture. Manufacture means bringing  into  existence

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new  goods. This Court observed in Union of India  v.  Delhi Cloth  Mills,  [1963] Suppl. I S.C.R. 586  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 is necessary and there  must be transformation, a new and  different  article must emerge having a distinctive name, character or use. The question,  therefore is whether the activity carried out  by the  appellant  of assembling the three  Components  of  the weighbridge brings into being complete weighbridge which was a   distinctive  name,  character  or  use.  See  also   the observations of this Court in Allenburry Engineers (p)  Ltd. Ramakrishna  Dalmia & Ors., [1973] 2 S.C.R. 257 and  Idandas v. Ananat Ramachandra Phadke, [1981] 3 Scale 1790.     The appellant’s contention before the Tribunal was  that it was only preparing a part and that part is dutiable as  a separate  part.  The  appellant, however, did  the  work  of assembling.  As a result of the work of the appellant a  new product known in the market and known under the excise  item "weighbridge" comes into being. The appellant will become  a manufacturer  of that product and as such  liable  to  duty. That  is precisely what the Tribunal found on the  facts  of the  case. The appellant seems to have been obsessed by  the idea  that as a part of machine is liable to duty  then  the whole end product should not be dutiable as separate  excise goods. That is mistake, a part may be goods as known in  the excise laws and may be goods as known in the excise laws and may  be dutiable. The appellant in this case claims to  have                                                     PG NO 4 manufactured  only  the indicator system. If  the  indicator system is a separate part and a duty had been paid on it and if  the rules so provide then the appellant may be  entitled to  abatement under the rules. But if the end product  is  a separate  product which comes into being as a result of  the endeavour  and activity of the appellant then the  appellant must be held to have manufactured the said item. When  parts and  the  end  product  are  separately  dutiable-both   are taxable.     In that view of the matter, the appellant’s case that it is  liable  only  for the component part  and  not  the  end product cannot be entertained. The Tribunal was,  therefore, right  in the view it took. These appeals have no merit  and are accordingly dismissed. This order will not prejudice the rights  of  the  appellant to claim, if  any,  abatement  as indicated before according to the rules if the appellant  is so entitled. R.S.S.                                    Appeals dismissed.                                                     PG NO 5