N.K. Bajpai, Member (T) -
(1.) THESE two appeals involve the same question and were heard together. They are therefore, being decided by a common order.
(2.) THE short point for consideration is whether tea chests made of plywood panels would be chargeable to duty once again when they are re -assembled, often in sizes different from the sizes of the original tea chests, after being dismantled, and after discarding worn out panels. In other words, the question is whether such re -assembly involves a process of manufacture as understood in Section 2(f) of the Central Excises and Salt Act, 1944 (the 'Act' for brief). The same question had arisen in an appeal of the Collector of Central Excise, Kanpur involving the appellants herein themvselves. It was decided by the Tribunal in the latter's favour by Order No. E/272/90 -D dated 12th April, 1990. We observe that the Tribunal had decided that appeal in the following words : -
"4. We have carefully considered the submissions made by the learned DR and the learned consultant. The Collector (Appeals) in his order has found that the respondents herein are taking used and duty -paid tea chests from which lid is removed, repair the damages and in very rare case, put some new plywood and re -assemble the chests and that what is given to them for making the original tea chests and what is obtained by the process is tea chests. The Collector (Appeals) in this situation found that no new product can be said to have emerged and hence there was no warrant to hold that a process of manufacture had taken place. According to him, it is only a process of repair or reconditioning. The department, however, holds that it was not a case of repair, but the manufacture of tea boxes commercially known differently from tea chests which are dismantled and used as raw material. Examining these contentions, we find that the original tea chests material, namely, the plywood, after dismantling is again used in the manufacture of plywood cases which are returned to the respondents by the job workers. It is on record that the same material is used and in rare cakes, new plywood is used. In such a context, the process would be more in the nature of re -assembling of the plywood cases. It is also used for packing tea by the respondents who have received loose tea in the original tea chests. From these facts of the situation, it would appear that the ratio of the Bombay High Court decision reported in 1981 (8) ELT 676 (Century Spinning) cited by the respondents would be applicable to the present case. That was a case in which worn out spinnerettes had been exported for repairs and had been re -imported and when the importer claimed exemption under Notification 53/6.1 granting exemption to articles when re -imported into India, after having been exported for repairs, the department held that what is imported is not repaired goods and were totally not identifiable with the worn out spinnerettes which were exported and exemption was denied. The process was that unserviceable worn out spinnerettes being exported for remelting, refining and re -making of new spinnerettes and the matter when it was taken upto the revision application level before the Government of India, was dismissed holding that the worn out spinnerettes exported by the party are melted and the precious metal of the spinnerettes is recovered and this amounts to a change of identity of the goods becoming thereby ineligible for the exemption notification. The Bombay High Court held that merely because the worn out spinnerettes were melted, it cannot be said that new product was manufactured liable to payment of duty. In the facts of the present case also, out of dismantled tea chests, plywood cases or boxes are made, which are also used for keeping package tea and in such circumstances, in the light of the ratio of the Bombay High Court decision, we are unable to accept the contention of the department that the process involved emergence of a new article having distinct characteristic and use. We further find that in a recent judgment in the case of Bharat Forge and Press Industries (P) Ltd. v. Collector of Central Excise - 1990 (45) ELT 525 (SC), the Hon'ble Supreme Court had held that merely because goods after processing become different commercial commodity or having a distinctive name does not change excise classification if they continue to be goods of the .same species. In that case, the Supreme Court held that pipe fittings made out of pipe and tubes continue to be pipe and tubes. In this view of the matter, we see no reason to interfere with the order passed by the Collector (Appeals). The appeal is rejected."
(3.) DURING his arguments, the learned Departmental Representative, Shri L. C. Chakravarti, distinguished this decision by placing reliance on paras 7 and 8 of the order of the Assistant Collector, Central Excise, Nagpur which are as under : -
"7. In this case I observe that M/s. Brooke Bond are supplying the raw material such as (i) Plywood panels/planks (ii) Battons (iii) Nails (iv) Strips of tin (v) Paints and Colours etc. to the job -workers viz., (i) M/s. Kanpur Saw Mills (ii) M/s. Soniya Packing Co. and (iii) M/s. M. P. Timber Works all of Kanhan. None of these job workers independently manufacture and sell the so -called plywood tea -chests or boxes as such. Their profession in the main is of Saw mill. None of these job workers have any interest in the manufacture of these "tea -chests" except for this assessee. In this connection, I may usefully refer to Hon'ble Supreme Court's decision in the case of M/s. Shree Agency [1977 (1) ELT 168]. In that case the Department found that so -called weavers had no interest in the production of cloth and the conclusion reached was that M/s. Shree Agency were actually engaged in the production of cotton fabrics and therefore, they were the real manufacturers. The facts of the above case squarely apply to the case before me. I have, therefore, no hesitation to hold that this assessee is the real manufacturer of the tea -chests in question.
8. "As to the question of manufacture, it is evident that what the assessee is supplying is the (i) Plywood Planks/Panels (ii) Plywood battons (iii) Strips of tin, Nails, Paints etc. etc. to the job workers and what they are receiving in return is the "Tea chests" a completely transformed article of a distinct name and character. This shows that there has been a definite manufacture of tea -chests and this activity cannot be termed as mere repairings/re -conditioning etc."
Shri Chakravarti's contention is that the job worker to whom the job of reassembling the tea -chests is entrusted does not receive the unserviceable tea -chests but the raw materials for putting together tea -chests and, to that extent, the job work that he undertakes in his premises constitutes "manufacture" because the raw materials having undergone transformation at his hands, and a new, identifiable commodity comes into existence. He submitted that the law on this question as laid down by the Supreme Court in numerous judgments Union of India V.Delhi Cloth and General Mills [AIR 1963 SC 791]. South Bihar Sugar Mills v. Union of India
[1978 (2) ELT J 336] is quite clear and the tea chests were therefore, excisable.;