Case: Hindustan Poles Corporation Vs. Commissioner Of Central Excise, Calcutta

earlier judgment it was held that if there should come into existence a new article with distinct character and use as a result of the process, the essential condition justifying manufacture of good is satisfied. 27. This Court in Commissioner of Sales Tax, Orissa and Anr. vs. Jagannath Cotton Company and Anr. (1995) 5 SCC 527 - mentioned that manufacture in its ordinary connotation, signifies emergence of new and different goods as understood in relevant commercial circles. 28. In Gramophone Co. of India Ltd. vs. Collector of Customs, Calcutta (2000) 1 SCC 549, this Court examined earlier cases of this Court and held that the 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 and use. In this case, the word (manufacture has various shades of meaning but unless defined under the Act it is to be interpreted in the context of the object and the language used in the sections. It would not be applicable in ceases where only processing activity is carried out. Further, such production activity must be by an industrial undertaking. 29. CCE vs. Markfed Vanaspati & Allied Industries reported in (2003) 4 SCC 184, this Court clearly held that the burden to prove that there is manufacture is on the Revenue. In that case, the question arose was whether the goods became excisable merely because it fell within a Tariff Item. Spent earth was earth on which duty had been paid. It remained earth even after the processing. Thus, if duty was to be levied on it again, it would amount to levying double duty on the same product. This Court further observed that merely because an item falls under Tariff Entry, it cannot be presumed or deemed that there is manufacture. 30. In the case of CCE vs. Technoweld Industries reported in (2003) 11 SCC 798, the question was whether drawing of wires wire rods amounted to manufacture. It was held that both the products were wires and merely because they were covered by two separate entries did not mean that the product was excisable. It was held that in the absence of any manufacture the product did not become excisable merely because there were two separate entries. 31. In the case of Metlex (I) P. Ltd. vs. CCE reported in (2005) 1 SCC 271, this Court observed that the entry makes no distinction between ordinary film and film which is lacquered or metallised or laminated. The Court arrived at a definite conclusion that a film remained a film and no new or distinct product has come into existence. 32. In Aman Marble Industries (P) Ltd. vs. CCE reported in (2005) 1 SCC 279, the question arose whether cutting of marble slabs amounted to manufacture for the purpose of Central Excise Act. This Court observed that after the activity is completed a marble would remain marble. Therefore, this activity did not attract the tax. 33. In Rajasthan SEB vs. Associated Stone Industries reported in (2000) 6 SCC 141, this Court observed that the word manufacture generally and in the ordinary parlance in the absence of its definition in the Act should be understood to mean bringing to existence a new and different article having a distinctive name, character or use after undergoing some transformation. When no new product as such comes into existence, there is no process of manufacture. Cutting and polishing stones into slabs is not a process of manufacture for the obvious and simple reason that no new and distinct commercial product came into existence as the end product still remained stone and thus its original identify continued. Ultimately, this Court held that it was also not possible to accept that excavation of stones and thereafter cutting and polishing them into slabs resulted in any manufacture of goods. 34. The question for consideration in Shyam Oil Cake Ltd.s case (supra) was whether processing of the edible oil, manufactured by the appellant, resulted in manufacture. This Court held that neither in the section note nor in the chapter note nor in the tariff item do we find any indication that the process indicated is to amount to manufacture. The start with, the product was edible vegetable oil. Even after refining, it remained edible vegetable oil. As actual manufacture has not taken place, the deeming provision cannot be brought into play in the absence of it being specifically stated that the process amounts to manufacture. 35. We have heard learned counsel for the parties at length. We have also carefully perused the pleadings and examined a series of cases decided by this Court. The following conclusions are irresistible: 1) The process carried out by the appellants do not change the basic identity or original character of M.S. Welded Pipes to make it a new marketable product leading to manufacture as defined under Section 2(f) of the Central Excise Act, 1944. 2) The burden to prove manufacture is always on the Revenue. In the instance case the Revenue has completely failed to prove that the activity carried out by the appellant amounts to manufacturing. It is settled law that when one particular item is covered by one specified entry, then the Revenue is not permitted to travel to residuary entry. 3) The residuary entry is meant only for those categories of goods which clearly fall outside the ambit of specified entries. Unless the Department can establish that the goods in question can by no conceivable process of welding be brought under any of the tariff items, resort cannot be had to be residuary item. 36. In view of the settled legal position the activity of the appellants of merely joining of three pipes, one with other, of different dimensions to obtain a desired length can by no stretch of imagination be brought within the category of manufacture.

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

Explanation:
1[ds]We have also carefully perused the pleadings and examined a series of cases decided by this Court. The following conclusions are irresistible:1) The process carried out by the appellants do not change the basic identity or original character of M.S. Welded Pipes to make it a new marketable product leading to manufacture as defined under Section 2(f) of the Central Excise Act, 19442) The burden to prove manufacture is always on the Revenue. In the instance case the Revenue has completely failed to prove that the activity carried out by the appellant amounts to manufacturing. It is settled law that when one particular item is covered by one specified entry, then the Revenue is not permitted to travel to residuary entry3) The residuary entry is meant only for those categories of goods which clearly fall outside the ambit of specified entries. Unless the Department can establish that the goods in question can by no conceivable process of welding be brought under any of the tariff items, resort cannot be had to be residuary item36. In view of the settled legal position the activity of the appellants of merely joining of three pipes, one with other, of different dimensions to obtain a desired length can by no stretch of imagination be brought within the category of manufacture