Case: Municipal Corpn. of Gr. Bombay Vs. Devidayal Electronics and Wires Limited

except for a fractional loss of 1%. It is also not in dispute that there is no change in the chemical composition of the product by the process undertaken. The trial Judge, therefore, held and, in our judgment, very rightly that the process can by no stretch of imagination be treated as manufacturing activity. Shri Dalal submitted that wire bards imported by the Company admeasure 16 sq. inch rectangular pieces, each weighing about 100 Kgs. and wire rods are received in the sizes of 6 mm to 10 mm. The learned counsel urged that the process undertaken is of rolling them to smaller sizes or flattening to rectangular shapes and the process of rolling comprises of heating the wire bars in furnace and passing the same between two rolls repeatedly reducing the size at every pass till the desired size is obtained. Shri Dalal submits that this process of heating the bards in furnace must be treated as a manufacturing activity. It is impossible to accede to the submission. Every activity which demands heating of the object cannot be treated as a manufacturing activity. Take for instance, gold or silver bars which undergo heating process at hands of goldsmith for reducing the size of the bars. Can it by any stretch of imagination be suggested that a different article with distinct character and identity as known in the market has come into existence The process is only for the purpose of reducing the size of the bars into smaller bars and, in our judgment, such process cannot be treated as manufacturing activity and squarely falls within the processing activity. Shri Dalal referred to the decision of the Supreme Court reported in 1978 (2) Excise Law Times 389 (Union of India v. Hindu Undivided Family Business known as Ramlal Mansukhrai, Rewari and Another) and A. I. R. 1977 Supreme Court 90 (The South Gujarat Roofing Tiles Manufacturers Association and another v. The State of Gujarat and Another) but the reliance on these authorities is not appropriate. The question which came up before the Supreme Court for consideration has no bearing to the question falling for determination in this appeal. The issue as to whether the particular activity amounts to processing or manufacturing has to be determined with reference to the facts of each case. In our judgment the trial Judge was perfectly right in concluding on the facts and circumstances of the case that the activities of reducing size of wire bars and wire rods amount to processing and not manufacturing. It is also required to be stated that as the Corporation had not cared to file affidavit before the learned Single Judge and while denying reliefs sought by the Company, the letters written by deputy Assessor and Collector (Octroi) assign no reasons, we called upon the counsel for the company to produce for our perusal the wire bars ad wire rods which are imported for the purpose of processing and which are subsequently transported to the factory after reducing the size. The learned counsel produced the wire bars and wire rods which were reduced in size and also the photographs of the original wire bars and wire rods. The original wires and bars could not be produced because of its huge size. Shri Dalal for the Corporation did not dispute that the articles produced by the respondents are those which were imported within the limits of the corporation and subsequently exported. On perusal of the articles, we have no hesitation in concluding that the activities undertaken within the limits of the Corporation are purely of processing and not manufacturing. It hardly requires to be stated that the right to recover octroi duty arises when the article is imported for the purposes of use, sale or consumption and processing activity cannot be considered as use of the article.( 7 ) SHRI Dalal then submitted that even assuming that the activities undertaken by the Company within the local limits of the Corporation are merely one of processing, still the advantage of rule 7 is not available. The learned counsel referred to sub-rule 6 (b) (1) and claimed that the activities set out under this sub-rule are the only activities which fall within expression "processing" while considering grant of exemption under Rule 7. The learned counsel while advancing this submission overlooks the provisions of sub-rule (4) of Rule 7 and sub-rule 6 (b) (2) which entitle the Commissioner to include any other process in the list of process set out under sub-rule (b) (1) of Rule 7. Shri Dalal submitted that as the Commissioner has rejected the claim of the Company, the decision is final in accordance with sub- rule (6) (b) (2 ). The submission overlooks that the decision is final as far as the Corporation is concerned and cannot bind the Court exercising powers under Article 226 of the Constitution of India. There is one more aspect of the matter which cannot be overlooked. The decision was communicated to the company by Deputy Assessor and Collector (Octroi) and who is not the Commissioner. Even assuming that the decision was communicated by Deputy Assessor and Collector in pursuance of the orders issued by the Commissioner, still two letters do not set out any reasons for denying the relief to the appellants. Shri Dalal also referred to the list of process which was approved by the commissioner for granting exemption and urged that the process undertaken by the Company does not fall within any of the 29 categories. The submission is not correct because Item 6 refers to heat treatment and even assuming that the list prepared by the Commissioner does not include the process referred to by the Company, still taking into consideration the provisions of sub-rule (4) of Rule 7, we are unable to appreciate why the advantage of Rule 7 should be denied to the company. In these circumstances we do not find any infirmity in the reasons and conclusions recorded by the trial Judge and the appeal must fail.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]( 6 ) THE first question which requires answer is whether the process employed in the case of bars and rods is a process which can be treated as a manufacturing activity as claimed by the corporation. It is nowby catena of decisions that the expression manufacture implies change, but every change is not manufacture. Before an activity can be considered as manufacture, what is necessary is not merely a change as a result of treatment, labour or manipulation but a transformation and a new and different article must emerge having a distinct name, character, or use. The trail Judge found that wire bars and wire rods are sent by the company to processing units located in Greater Bombay with the object to reduce the thickness of wire bars. The wire bars of which thickness is reduced are ultimately used by the Company in the factory for manufacture of various articles. The process undertaken within the limits of municipal Corporation of Greater Bombay is only to reduce the thickness of the wire bards or wire rods. It is not in dispute that by reduction of thickness, wire bars and wire rods do not lose its weight except for a fractional loss of 1%. It is also not in dispute that there is no change in the chemical composition of the product by the process undertaken. The trial Judge, therefore, held and, in our judgment, very rightly that the process can by no stretch of imagination be treated as manufacturing activity. Shri Dalal submitted that wire bards imported by the Company admeasure 16 sq. inch rectangular pieces, each weighing about 100 Kgs. and wire rods are received in the sizes of 6 mm to 10 mm.The learned counsel urged that the process undertaken is of rolling them to smaller sizes or flattening to rectangular shapes and the process of rolling comprises of heating the wire bars in furnace and passing the same between two rolls repeatedly reducing the size at every pass till the desired size is obtained. Shri Dalal submits that this process of heating the bards in furnace must be treated as a manufacturingactivity. It is impossible to accede to the submission. Every activity which demands heating of the object cannot be treated as a manufacturing activity. Take for instance, gold or silver bars which undergo heating process at hands of goldsmith for reducing the size of the bars. Can it by any stretch of imagination be suggested that a different article with distinct character and identity as known in the market has come into existence The process is only for the purpose of reducing the size of the bars into smaller bars and, in our judgment, such process cannot be treated as manufacturing activity and squarely falls within the processing activity. Shri Dalal referred to the decision of the Supreme Court reported in 1978 (2) Excise Law Times 389  (Union of India v. Hindu Undivided Family Business known as Ramlal Mansukhrai, Rewari and Another) and A. I. R. 1977 Supreme Court 90 (The South Gujarat Roofing Tiles Manufacturers Association and another v. The State of Gujarat and Another) but the reliance on these authorities is not appropriate. The question which came up before the Supreme Court for consideration has no bearing to the question falling for determination in this appeal. The issue as to whether the particular activity amounts to processing or manufacturing has to be determined with reference to the facts of each case. In our judgment the trial Judge was perfectly right in concluding on the facts and circumstances of the case that the activities of reducing size of wire bars and wire rods amount to processing and not manufacturing. It is also required to be stated that as the Corporation had not cared to file affidavit before the learned Single Judge and while denying reliefs sought by the Company, the letters written by deputy Assessor and Collector (Octroi) assign no reasons, we called upon the counsel for the company to produce for our perusal the wire bars ad wire rods which are imported for the purpose of processing and which are subsequently transported to the factory after reducing the size. The learned counsel produced the wire bars and wire rods which were reduced in size and also the photographs of the original wire bars and wire rods. The original wires and bars could not be produced because of its huge size. Shri Dalal for the Corporation did not dispute that the articles produced by the respondents are those which were imported within the limits of the corporation and subsequently exported. On perusal of the articles, we have no hesitation in concluding that the activities undertaken within the limits of the Corporation are purely of processing and not manufacturing. It hardly requires to be stated that the right to recover octroi duty arises when the article is imported for the purposes of use, sale or consumption and processing activity cannot be considered as use of thelearned counsel while advancing this submission overlooks the provisions of(4) of Rule 7 and6 (b) (2) which entitle the Commissioner to include any other process in the list of process set out under(b) (1) of Rulesubmission overlooks that the decision is final as far as the Corporation is concerned and cannot bind the Court exercising powers under Article 226 of the Constitution of India. There is one more aspect of the matter which cannot be overlooked. The decision was communicated to the company by Deputy Assessor and Collector (Octroi) and who is not the Commissioner. Even assuming that the decision was communicated by Deputy Assessor and Collector in pursuance of the orders issued by the Commissioner, still two letters do not set out any reasons for denying the relief to the appellants. Shri Dalal also referred to the list of process which was approved by the commissioner for granting exemption and urged that the process undertaken by the Company does not fall within any of the 29 categories. The submission is not correct because Item 6 refers to heat treatment and even assuming that the list prepared by the Commissioner does not include the process referred to by the Company, still taking into consideration the provisions of(4) of Rule 7, we are unable to appreciate why the advantage of Rule 7 should be denied to the company. In these circumstances we do not find any infirmity in the reasons and conclusions recorded by the trial Judge and the appeal must fail.