vil Appeal Nos 3804 to 3807 of 1988
From the Judgment and Order dated 23111987 of the Bombay High Court in Second Appeal No 404 of 1985 WP No 607 of 1985 ant Second Appeal No 86 of 1986
RK Garg Vijay Hansaria and Sunil K Jain for the Appellants
PG NO 714 SB Bhasme VM Tarkunde AS Bhasme VN Ganpule S K Agnihotri AG Pawar and AB 
Lal for the Respondents
The Judgment of the Court was delivered by DUTT J
Special leave is granted in all these matters
Heard learned Counsel for the parties
The principal question that is involved in these appeals is some what peculiar
The question is whether the Food  Civil Supplies Department Sholapur has a separate and independent existence or whether it is part and parcel of the Revenue Department
The best authority which can answer the question is the Government but the Civil Courts and the High Court have not been able to accept the Government version that the Food  Civil Supplies Department Sholapur is an independent Government Department and does not form part of the Revenue Department
The facts leading to the question will be stated presently
The Commissioner of Pune Division by his order dated January 27 1981 granted promotions to the appellants to the posts of Awal Karkuns and directed that the private respondents herein who were holding these posts would be repatriated to their parent department that is the Revenue Department
Aggrieved by the said order of the Commissioner Pune Division some of the private respondents filed a civil suit for a declaration that the said order granting out of turn promotions to the appellants as Awal Karkuns was unjust illegal and violative of the fundamental rights of the respondents guaranteed under Articles 14 and 16 of the Construction of India
The learned Civil Judge Senior Division Sholapur decreed the suit and declared that the impugned order of the Commissioner Pune Division was discriminatory illegal and not binding upon the respondents
The learned Civil Judge also granted an injunction permanently restraining the Government from reverting the respondents from the posts of Awal Karkuns to the posts of Clerks on appeal
the Fourth Addition District Judge Sholapur upheld the judgment and decree of the Civil Court and dismissed the appeal preferred by the appellants and the State of Maharashtra The appellants and the State of Maharashtra filed two separate second appeals to the High Court of Bombay
In the meantime some of the respondents also filed writ petitions in the High Court challenging the validity of the impugned order of the Commissioner Pune Division
The High Court by a common judgment disposed of the second appeals and the writ petitions
The High Court PG NO 715 came to the finding that the Food  Civil Supplies Department Sholapur had no separate existence on the date the impugned order was passed and that it was part and parcel of the Revenue Department
Upon that finding the High Court dismissed the second appeals and allowed the writ petitions of the respondents
It is not disputed before us that before 1965 there was no such Department as the Food  Civil Supplies Department at Sholapur
Initially the Agriculture Food  Cooperation Department of the Government was entrusted with the subject of food and the supply thereof
By a circular dated January 13 1965 of the Government of Maharashtra a new department called the Civil Supplies Department was created
By a subsequent Government circular dated May 13 1965 it was renamed as Food  Civil Supplies Department 
It appears from the said Government circular dated January 13 1965 creating the department that the Agriculture Food  Cooperation Department was renamed as the Agriculture  Cooperation Department
In other words the subject of food was withdrawn from the said and a new Department namely the Civil Supplies Department
subsequently renamed as Food  Civil Supplies Department was created
After the creation of the Food  Civil Supplies Department the rationing was introduced in Sholapur City and Salgarwadi area under the control of the Food  Civil Supplies Department which will appear from the Government resolution dated February 19 1966
As a result of introduction of statutory rationing several posts had to be created in the establishment of the Controller of Rationing which was admittedly a part of the Food  Civil Supplies Department
Certain posts were also transferred from the Revenue Department to the Food  Civil Supplies Department along with the holders of such posts
The most significant fact in this regard is that the holders of the posts had to be appointed afresh as personnel of the Food  Civil Supplies Department which will also appear from the Government resolution dated February 19 1966
It is not disputed that at the time that is to say after the introduction of statutory rationing the Food  Civil Supplies Department was an independent Government Department at Sholapur
The statutory rationing was discontinued in Sholapur with effect from May 1 1968
The posts in the rationing establishment were directed to be merged in the office of the Foodgrain Distribution Officer Sholapur and the expenditure on that account was directed to be debited to PG NO 716 the budget head 26 Miscellaneous Department Civil Supplies Department iii Procurement Distribution and Price Control b Mofussil and met from the grants sanctioned thereunder
It is however not disputed that some of the rationing staff were retrenched some were absorbed in the Revenue Department and the remaining staff were directed to be merged in the office of the Food grain Distribution Officer Sholapur with effect from May 1 1969
So far as the appellants before us are concerned they were not retrenched but according to the private respondents they were absorbed in the Revenue Department
This has been emphatically disputed by the appellants
Mr Tarkunde learned Counsel appearing on behalf of the private respondents has drawn our attention to a letter dated October 25 1969 written by the Foodgrain Distribution Officer Sholapur to the Collector Revenue Branch Sholapur
In that letter the Food grain Distribution Officer Sholapur requested the Collector to absorb the remaining staff of the rationing department who were then working in the Foodgrain Distribution Office
At this stage it may be that there is no dispute that both the Departments namely the Food  Civil Supplies Department and the Revenue Department were under the District Collectorate
A list was attached to the said letter dated October 25 1969 of the Foodgrain Distribution Officer relating to absorption of rationing staff in the Revenue Department
The list contains the names of the appellants and under column No 7 of the list it has been recorded that the appellants and other remaining staff were willing to work in the Revenue Department
In view of the said letter of the Foodgrain Distribution Officer and the list annexed to his letter written to the Collector it is submitted by the learned Counsel appearing on behalf of the private respondents that the appellants were transferred to the Revenue Department as the Food  Civil Supplies Department was abolished on the abolition of the statutory rationing
It has been already noticed that some of the staff of the rationing establishment who were not retrenched were transferred to the office of the Foodgrain Distribution Officer
According to the respondents the Foodgrain Distribution Office is under the Revenue Department while the appellants aver that it belongs to the Food  Civil Supplies Department
In this regard the most important say is that of the Government
It is asserted on behalf of the State of Maharashtra that the Food grain Distribution Officer belongs to the Food  Civil Supplies Department
The PG NO 717 controversy in this respect can be easily resolved by referring to the said letter dated October 25 1969 of the Foodgrain Distribution Officer to the Collector Revenue Branch
If the Foodgrain Distribution Office belongs to the Revenue Department there was no necessity for the Foodgrain Distribution Officer to request the Collector Revenue Department to absorb the unretrenched staff of the rationing establishment
Be that as it may the question that arises is whether the appellants were absorbed in the Revenue Department
It is true that under column No 7 of the list annexed to the said letter dated October 25 1969 of the Food grain Distribution Officer it has been recorded that the appellants and other staff of the rationing establishment were willing to work in the Revenue Department
There is however nothing to show that as a matter of fact the appellants were transferred to the Revenue Department
The appellants might be willing to be absorbed in the Revenue Department but there is no material in proof of the alleged absorption of the appellants in the Revenue Department
It is also not the case of the State Government that the appellants were absorbed in the Revenue Department
In the counter affidavit of the respondent No 1 it is stated as follows That the District Collector of Solapur by his memorandum dated 17 4 1969 laid down the conditions of giving alternative employment to the retrenched ex civil supply staff in Revenue Department
These conditions are 1 That the services in Revenue Department are transferable throughout the district
2 That Revenue employees are required to pass departmental examination within prescribed period
3 That to hold Awal Karkun s post Revenue employee is required to pass revenue qualifying exam
in addition to Sub Service Department Examination
 It is clear from the statement extracted above that one of the conditions for absorption was that the appellants were required to pass the departmental examination within the prescribed period
Another conditions was that one had to pass revenue qualifying examination in addition to Sub Service Department Examination for holding the post of Awal Karkun in the Revenue Department
It is not disputed that the appellants have not passed any of these examinations
This shows that as they did not fulfil the conditions for PG NO 718 absorption in the Revenue Department they could not be transferred to or absorbed in that Department
The High Court proceeded on the assumption that on the abolition of the statutory rationing the Food  Civil Supplies Department Sholapur also came to be absolished
Indeed this is also the contention of the private respondents
Food is an important matter for Government s consideration and it was the responsibility of the Agriculture Food  Cooperation Department before the creation of the Food  Civil Supplies Department
The said Department was renamed as Agriculture  Cooperation Department  inasmuch as food  was taken out of that Department and placed under the Food  Civil Supplies Department
Thus the fact of introduction or abolition of statutory rationing has nothing to do with the question of food and supply thereof which must be dealt with by some department of the government and after the creation of the Food  Civil Supplies Department it was dealt with by that Department
It will be wrong to assume that the Food  Civil Supplies Department dealing with food and supply thereof will be abolished consequent on the abolition of the statutory rationing
In the counter affidavit of the State of Maharashtra affirmed by Shri Chandrasen Pandarinath Kamble it has been stated inter alia that in the State of Maharashtra there is a system of Fair Price Shops and Household Card System in the areas where statutory rationing system does not exist This Fair Price Shops and Household Card system undoubtedly comes under the control and supervision of the Food  Civil Supplies Department
As the Department existed it can be reasonably presumed that it had its own staff and the appellants contention that they were retained in the Food  Civil Supplies Department seems to be correct
Merely the fact of giving of consent by the appellants to their absorption in the Revenue Department fails to persuade us to hold that the appellants were absorbed in the Revenue Department in the absence of any proper material in that regard
A question has however been raised on behalf of the private respondents that if the Department of Revenue and the Food  Civil Supplies Department are two different Departments of the Government there is no material to show how the respondents came to hold posts in the Food  Civil Supplies Department
It is true that there is no order showing that the respondents were transferred on deputation from the Revenue Department to the Food  Civil Supplies Department
In our opinion in view of the facts and circumstances stated above it can be reasonably presumed PG NO 719 that the respondents were sent on deputation to the Food  Civil Supplies Department otherwise there was no question of their repatriation to their parent department that is the Revenue Department
There are other materials which would also justify the finding that the Food  Civil Supplies Department and the Department of Revenue are two independent and separate Departments even after the abolition of statutory rationing
The Governor of Maharashtra by an order dated April 13 1983 framed rules under the proviso to Article 309 of the Constitution of India for regulating recruitment to the posts of Assistant Commissioner Supply District Supply Officer and Foodgrain Distribution Officer Class I under the Food  Civil Supplies Department of the Government of Maharashtra
Framing of these rules proves two things namely that the Food  Civil Supplies Department has independent and separate existence and that the Foodgrain Distribution Officer belongs to that Department
Another set of rules was framed under the proviso to Article 309 of the Constitution of India by the notification dated May 21 1984 for regulating recruitment to Class 11 posts in the Food  Civil Supplies Department of the Government of Maharashtra
The framing of these rules for regulating the recruitment of officers in the Food  Civil Supplies Department supports the case of the appellants and also of the Government that the Food  Civil Supplies Department Sholapur is an independent Department
The final gradation list of supply staff of directly recruited Clerks and Godown Keepers was prepared and published
It is
however contended on behalf of the private respondents that the supply staff belong to the Revenue Department
This contention is without any substance
The words supply staff undoubtedly refer to the supply staff of the Food  Civil Supplies Department 
The State Government is justified in placing reliance upon the gradation list in support of its case that the Food  Civil Supplies Department is an independent and separate Department
It is therefore apparent from the above facts particularly the fact that separate rules were framed for recruitment of officers in the Food  Civil Supplies Department and a final gradation list was also prepared and published and the Food  Civil Supplies Department not part and parcel of the Revenue Department but it has a separate and independent existence
This finding finds support from another fact that the Revenue Department has its own gradation list of its employees including the private respondents
PG NO 720 We may now deal with one more submission made on behalf of the private respondents
Our attention has been drawn to a fact which has also been noticed by the High Court namely that by a Government order issued to all Commissioners of Divisions it was directed that the posts of Inspecting Officers should be made available to the persons from the Revenue Department as well as from the Food  Civil Supplies Department in the ratio of 7525
It is submitted on behalf of the private respondents that this Government order points to the fact that both the Food  Civil Supplies Department and the Revenue Department are one and the same Department at Sholapur
We are unable to accept this contention
The Government order in question in our opinion establishes the fact that the two Departments are separate Departments of the Government
It has been already noticed that some officers of the Revenue Department were holding the posts in the Food  Civil Supplies Department Sholapur presumably on deputation and hence the ratio with regard to the posts of Inspecting Officers with which we are not concerned had to be fixed
If the two Departments were not separate Departments there was no necessity for mentioning the names of these two Departments in the said order
It is not disputed that the posts of Inspecting Officers are posts of the Food  Civil Supplies Department
The contention of the private respondents based on the said Government order is accordingly rejected
Before we conclude the judgment we may refer to an unreported Bench decision of the Nagpur Bench of the Bombay High Court in Special Civil Applications Nos 707 of 1974 and 4258 and 4834 of 1976 Shri Atmaram Chaturji Garbade  Ors
vs State of Maharashtra  Ors disposed of on January 13 1977 where it has been held that the two departments are separate
It is however contended by Mr Tarkunde that the Nagpur Bench decision has no bearing on the instant appeals before us as it relates to the city of Nagpur and cantonment in Kampte where the Food  Civil Supplies Department was not abolised
It however appears that in that decision the Bench has taken into consideration some common documents
Be that as it may in the instant appeals there are ample materials which justify the conclusion that the two departments are not one and the same department but are two separate departments
In the circumstances we are unable to agree with the High Court that the appellants are employees of the Revenue Department inasmuch as after the abolition of the statutory rationing the Food  Civil Supplies Department was also abolished and the appellants were absorbed in the Revenue PG NO 721 Department
As the appellants belong to a different department their promotions will be governed by the rules of that department
Similarly the promotions of the private respondents will be considered in accordance with the rules of the Revenue Department
We are told that after their repatriation to their parent department all the private respondents were promoted to the posts of Awal Karkuns
For the reasons aforesaid we set aside the judgment of the High Court as also of the trial court and that of the lower appellate court and dismiss the suit and the appeals
The writ petitions filed  in the High Court are also dismissed
The instant appeals are allowed but in view of the peculiar facts and circumstances of the cases there will be no order as to costs
R SS
Appeals allowed


Summary:
The appellant assessee manufactures and supplies to the Indian Railway wheels tyres and axles as separate items
The goods are forged products
After being forged the goods are rough machined and polished before supplying thus removing the excess layer of steel commonly referred to as excess skin 
The appellant also makes and supplies to the Railways wheels and axles as composite units
Right from 1962 the appellantassessee was filing classification lists showing the forged goods as liable to excise duty only under Tariff Item No 26AAia of the Central Excise Tariff set out in the First Schedule to the  and this classification was being accepted and approved by the Excise Authorities
It is common ground that duty under Tariff Item No 26AA was payable on the forged product and duty under Tariff Item No 68 was payable only at the stage of the completion of the manufacture of the finished goods
In 1981 the Assistant Collector Central Exicse called upon the appellant to show cause why it should not be proceeded against for contravention of Rule 173 B 9i read with Rule 173Gi and Rule 173ia on the ground that the goods supplied to the railways were not forged items as such but the said goods after they had undergone machining and polishing after having been forged had been turned into a distinct commercial commodity which process amounted to manufacture and hence the goods were liable to excise duty as set out in Item 68
The notice also called upon the appellant to show cause as to why duty on the forged goods under Tariff Item No 26AAia should not be payable on the footing of the weight of the goods as forged and before 1024 the removal of the excess skin
The basic contention of the revenue was that the goods were liable to duties at two stages namely under Tariff Item No 26AAia when they were forged and under Triff Item No 68 after they were machined and polished
The stand of the appellant was that the process of forging of the goods could be paid to be completed only after machining and polishing that machining and polishing was required to be done in order to bring the goods in line with the specification of the Indian Railways that the goods supplied have to be further precision machined and fine polished at the railway workshop before these could be put to use by the railways and hence the machining by the appellant did not amount to manufacture
A Certificate issued by the Railways states that axles are supplied to the railways in rough machined condition and wheels tyres and blanks are supplied in as rolledas forged condition
It further states that these wheels tyres exles and blanks have to be sometimes rough machined partially to remove excess steel or manufacturing defects and these products are subsequently precision machined by the Railways at their workshops before being put to use
The Collector rejected the stand of the appellant and held that the appellant was liable to pay differential duty under Item 26 AA ia on the difference between weight of the said goods when forged and the weight after machining to remove the excess skin as well as the duty under Tariff Item No 68
The Collector also held that the appellant was liable to penalty of Rs1 lac under Rule 173 Q for suppression of facts or giving misleading particulars
On that basis the Collector took the view that the period of limitation for making the demand was 5 years prior to the service of the show cause notice
The appellant filed writ petition in the Patna High Court for quashing the order passed by the Collector
The High Court accepted the conclusions of the Collector save and except that they took the view that there was no suppression or mis statement of facts and hence the period of limitation would be only 6 months prior to the service of the show cause notice
The Appellants contends before this Court that machining and polishing which is done in its workshop was not of a significant character and is only in the nature of shaping by removing the superficial material to bring the forged items upto Railways  specifications
It is further 1025 contended that the weight should be measured only after the machining and polishing at the appellant s workshop was complete
The Respondents on the other hand contend that the forging of the goods was complete before machining and polishing was done and that the duty on the forged goods under Tariff Item No 26AAia should be payable on the footing of the weight of the goods as forged and before the removal of the excess skin by machining
Three points arise for decision 1 at what stage could the goods suplied by said to be forged and in respect of the said goods whether the weight for the purpose of levy of excise duty under item 26AAia should be taken before or after the machining and polishing is done by the appellant to remove excess skin ii whether as a result of machining and polishing the forged goods were transformed into new commercial commodities iii whether the appellant was guilty of misstatement of facts so as to attract longer period of limitation
Allowing the appeal this Court  HELD i The removal of extraunwanted surface steel by either trimming or skin cutting of the forged product must be regarded as incidental or ancillary to the process of manufacture as defined in sub section 2f of the 
The appellant is therefore liable to pay duty on the goods referred to in the petition other than the composite units only under Item No 26AAia of the First Schedule to the Central Excises Act and the duty will be based on the weight after the machining carried out in the factory of the appellant to remove the excess skin or excess surface steel
1030D F ii It is quite clear on facts that the finished goods namely finished wheels tyres axles and blanks could be said to have come into existence only after the precision machining and other processing at the Railways  workshops was complete and therefore the appellant is not liable to pay any duty on these goods as under Item No 68 of the Central Excise Tariff
1031F iii It is common ground that right from 1962 the appellant s classification lists were accepted and approved by the excise authorities
In these circumstances it could not be said that the appellant was guilty of any suppression or mis statement of facts or collusion or violation of the provisions of the Central Excises Act as contemplated under the proviso to Section 11 A of the said Act
In view of this the period of limitation would clearly be only six months prior to the service of the show cause notice
1032E F 1026 iv In respect of the composite sets it is beyond dispute and it is conceded by the appellant that the appellant is liable to pay duty both under Items Nos 26AAia and 68 but only for a period of six months prior to the service of the show cause notice
1033A B Metal Forgings Pvt Ltd vs Union of India 1985 20 ELT approved