determination of manufacture?
yash doshi
(Querist) 05 August 2008
This query is : Resolved
can anyone tell any case laws(preferrably supreme court) where it has been determined that if excise duty is paid on any product then the company is a manufacturing concern?
Guest
(Expert) 05 August 2008
One of the cases could be this
M/S. Kores India Ltd., Chennai vs Commissioner Of Central Excise
CASE NO.:
Appeal (civil) 4322 of 1999
PETITIONER:
M/s. Kores India Ltd., Chennai
RESPONDENT:
Commissioner of Central Excise, Chennai
DATE OF JUDGMENT: 23/11/2004
BENCH:
ARIJIT PASAYAT & C.K.THAKKER
JUDGMENT:
J U D G M E N T
With
[C.A. Nos. 2682-2690 of 2000]
ARIJIT PASAYAT, J.
These appeals are inter-linked. In Civil Appeal No.4322 of 1999
M/s Kores India Ltd., Chennai (hereinafter referred to as the
assessee) calls in question legality of the judgment rendered by the
Customs, Excise and (Gold) Control Appellate Tribunal, South Zonal
Bench, Chennai (in short the Tribunal) holding that demand for duty
raised in respect of typerwriter/telex ribbons is in order. In the
connected appeals Commissioner of Central Excise, Indore calls in
question legality of the New Delhi Bench of CEGAT taking a divergent
view in holding that duty was not payable.
Background facts in a nutshell are as follows:
So far as civil appeal no.4322/1999 is concerned, show cause
notice was issued by the Collector of Central Excise, Chennai (in short
the Commissioner) on 22.3.1993, inter alia, proposing levy of duty on
the typewriter ribbons cleared by the assessee during the period
1.3.1988 to 30.9.1992 by invoking extended period of limitation under
proviso to Section 11A of the Central Excise and Salt Act, 1944 (in
short the Act). In the reply to the show cause notice, assessee took
the stand that no process of manufacturing is involved in the concerned
transaction. Assessee receives excise duty paid on typewriter/telex
ribbons in jumbo rolls of 210 mtrs. or more length from two small scale
units in Madras. In the assessees factory typewriter rolls are fed
into cutting and spooling machines wherein the ribbons of standard
length of 10 mtrs. and 5 metrs. are cut and spooled into metal spoons.
The ribbons in spools are packed and sold by the assessee. With
reference to Heading 96.12 of the Schedule to the Central Excise Tariff
Act, 1985 (in short the Tariff Act) it was submitted that since
appropriate central excise duty had been levied on the rolls there is
no question of paying any further duty. Apart from cutting of ribbons
into standard pre-determined lengths, the assessee does not take any
activity on the ribbons received. It is to be noted that by order-in-
original no.40/93 dated 19.8.1993 passed by the Collector of Central
Excise, duty of Rs.2,89,76000/- was levied on clearance of carbon
papers and typewriter ribbons from the assessees factory at Madras.
Duty was affirmed under Rule 9(2) of the Central Excise Rules, 1944 (in
short the Rules) read with proviso to sub-section (1) of Section 11A
of the Act. Further demand of Rs.2,14,066/- was confirmed on seized
carbon papers and ribbons. Seized goods of both varieties valued at
Rs.5,36,276.36 were held to be liable for confiscation and were
released by enforcing the Bank Guarantee furnished to the extent of
Rs.50,000/-. Collector also levied penalty of Rs.30 lakhs under Rule
173Q of the Rules.
Show cause notice related to the two products i.e. carbon papers
for the period 1.3.88 to September, 1992 and typewriter/Telex ribbons
for the period 1.4.88 to September, 1992. The present dispute relates
only to typewriter/telex ribbons.
The CEGAT held that the cutting of ribbons in smaller size and
spooling them into on the automatic spooling machines amounts to
manufacture and, therefore, duty is payable on these ribbons. The
conversion is done as per requirement of consumers in different spools
to suit Typewriter machines of different brand names. Ribbons received
by the Madras Unit cannot be supplied to the customers in the form
received by merely reducing the length by cutting. It is further held
that the product becomes saleable commodity only after
