Case: Siddhartha Tubes Ltd Vs. Comnr.Of Cutstoms &amp; Central Excise,.M.P

included in its assessable value. In this connection, learned counsel relied upon the judgment of this Court in the case of Sidhartha Tubes Ltd. vs. Collector of Central Excise reported in 2000 (115) ELT 32 ; and the decision in the case of Procter & Gamble Hygiene & Health Care Ltd. vs. Commissioner of Central Excise, Bhopal reported in 2005 (9) Scale 559. 6. In the present case, the commissioner on facts found that the assessee was clearing from its factory galvanized pipes classifiable under heading 73.06. It was not disputed that the process of galvanization by itself did not amount to manufacture, but when the assessee was selling its product (m.s. galvanized pipes) manufactured out of H.R. coils after passing through various processes (including galvanization) then such a process gave value addition to the product and consequently, the cost of galvanization has to be included in the assessable value. Galvanization added to the quality. Galvanization increased the value of pipes. It enriched the value of goods and, therefore, the cost incurred by the assessee for galvanization was required to be included in the assessable value.7. At the outset, we may state that value is the function of price under section 4(4)(d)(i) of the Act. The concept of "valuation" is different from the concept of "manufacture". Under section 3 of the Act, the levy is on the manufacture of the goods. However, the measure of the levy is the normal price, as defined under section 4(1)(a) of the Act. It is not disputed that galvanization as a process does not amount to manufacture. However, on facts, it has been found by the commissioner that the process of galvanization has taken place before the product is cleared from the place of removal, as defined under section 4(4)(b). Further, on facts, the commissioner has found that galvanization has added to the quality of the product. It has increased the value of the pipes. Hence, the costs incurred by the assessee for galvanization had to be loaded on to the sale price of the pipes. Therefore, the cost had to be included in the assessable value of m.s. galvanized pipes. We do not find any error in the reasoning of the adjudicating authority. 8. In the case of Union of India & others vs. Bombay Tyre International Ltd. report in AIR 1984 SC 420 , this Court observed as follows: "....the price of an article is related to its value, and into that value one has to pour several components, including those which enrich the value of the product and which give to an article, its marketability in the trade. Therefore, the expenses incurred on account of the several factors, which have contributed to the value of the product up to the date of sale, are liable to included in the assessable value." 9. Recently, this court in the case of Procter & Gamble Hygiene & Health Care (supra), has observed as follows: "9. This case relates to valuation. At the outset, we would like to clarify certain concepts under the Excise Law. The levy of excise duty is on the "manufacture" of goods. The excisable event is the manufacture. The levy is on the manufacture. The measure or the yardstick for computing the levy is the "normal price" under section 4(1)(a) of the Act. The concept of "excisability" is different from the concept of "valuation". In the present case, as stated above, we are concerned with valuation and not with excisability. In the present case, there is no dispute that AMS came under sub-heading 3402.90 of the Tariff. There is no dispute in the present case that AMS was dutiable under section 3 of the Act. In the case of Union of India & others etc. vs. Bombay Tyre International Ltd. etc. reported in AIR 1984 SC 420 , this Court observed that the measure of levy did not conclusively determine the nature of the levy. It was held that the fundamental criterion for computing the value of an excisable article was the price at which the excisable article was sold or was capable of being sold by the manufacturer. It was further held that the price of an article was related to its value and in that value, we have several components, including those components which enhance the commercial value of the article and which give to the article its marketability in the trade. Therefore, the expenses incurred on such factors inter alia have to be included in the assessable value of the article up to the date of the sale, which was the date of delivery.10. In the case of Sidhartha Tubes Ltd. vs. Collector of Central Excise reported in 2000 (115) ELT 32 , this court held that the process of galvanization, though did not amount to "manufacture", resulted in value addition and, therefore, the galvanization charges were includible in the assessable value of the M.S. black pipe.11. The concepts of "manufacture" and "valuation" are two different and distinct concepts. In the present case, we are concerned with valuation. Value is the function of price under section 4(1)(a) of the said Act..." 10. In the case of Hindustan Polymers vs. C.C.E. reported in 1989 (43) ELT 165 , this Court has held that the normal price for which goods are sold at the factory gate has to be taken as the assessable value and addition thereto has to be made where, in addition to the price, the manufacturer levied a charge for an item which was intrinsically necessary to place the manufactured goods on the market. 11. In the present case, we find that the product cleared from the factory was m.s. galvanized pipes. Galvanization had given value addition to the m.s. pipes. The process of galvanization was incidental to the manufacture of the m.s. galvanized pipes and, therefore, the cost of that process was rightly included in the assessable value. We do not find any error in the concurrent findings recorded by the commissioner and by the tribunal.

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

Explanation:
1[ds]6. In the present case, the commissioner on facts found that the assessee was clearing from its factory galvanized pipes classifiable under heading 73.06. It was not disputed that the process of galvanization by itself did not amount to manufacture, but when the assessee was selling its product (m.s. galvanized pipes) manufactured out of H.R. coils after passing through various processes (including galvanization) then such a process gave value addition to the product and consequently, the cost of galvanization has to be included in the assessable value. Galvanization added to the quality. Galvanization increased the value of pipes. It enriched the value of goods and, therefore, the cost incurred by the assessee for galvanization was required to be included in the assessable value.7. At the outset, we may state that value is the function of price under section 4(4)(d)(i) of the Act. The concept of "valuation" is different from the concept of "manufacture". Under section 3 of the Act, the levy is on the manufacture of the goods. However, the measure of the levy is the normal price, as defined under section 4(1)(a) of the Act. It is not disputed that galvanization as a process does not amount to manufacture. However, on facts, it has been found by the commissioner that the process of galvanization has taken place before the product is cleared from the place of removal, as defined under section 4(4)(b). Further, on facts, the commissioner has found that galvanization has added to the quality of the product. It has increased the value of the pipes. Hence, the costs incurred by the assessee for galvanization had to be loaded on to the sale price of the pipes. Therefore, the cost had to be included in the assessable value of m.s. galvanized pipes. We do not find any error in the reasoning of the adjudicating authority.In the present case, we find that the product cleared from the factory was m.s. galvanized pipes. Galvanization had given value addition to the m.s. pipes. The process of galvanization was incidental to the manufacture of the m.s. galvanized pipes and, therefore, the cost of that process was rightly included in the assessable value. We do not find any error in the concurrent findings recorded by the commissioner and by the tribunal.