D.N.Patel,J. - (1.) These Tax Appeals have been preferred against a common judgment and order No. A-720-722/KOL/2006 dated 27th July, 2006/31st July, 2006 passed by the Customs, Excise and Service Tax Appellate Tribunal (hereinafter to be referred to as 'CESTAT') in Appeal Nos. EDM- 01-03 of 2005 East Regional Bench, Kolkata which is the impugned order, whereby the appeals preferred by the respondents were allowed and order-in-original no. 9- 14/Commissioner/2005 passed by the Commissioner, Central Excise, Jamshedpur dated 29th September,2005 was quashed and set-aside. Being aggrieved and dissatisfied by the order passed by the CESTAT, the present Tax Appeals have been preferred by the department raising following substantial questions of law: (i) Whether Hon'ble Tribunal has committed an error of law in holding that the activities for processing TMT coils into TMT bars/rods after de-coiling, straightening and cutting into size is identical to the activity in the case of M/s. Faridabad Iron & Steel Traders Association v. Union of India (ii) Whether the activities for processing TMT coils into TMT bars/rods after de-coiling, straightening and cutting into size amounts to manufacturing process Arguments Advanced On Behalf of Appellant
(2.) Learned counsel for the appellant has submitted that in the facts of the present case, TMT coil has been processed further by Castings (India) INC.-respondent no.1 and the same is converted into brand name of 'TISCON' TMT Bars. This manufactured item is classifiable under Sub-Heading No. 7214.90 of the Schedule to the Central Excise Tariff Act, 1985. TMT coil is falling within Sub-Heading No. 7213.90 of the Act, 1985. The activities undergone for conversion of TMT coils into TMT bars are de-coiling, straightening and cutting into desirable sizes with the help of energy and it converts TMT coils into TMT bars which are absolutely new, distinct and identifiable products. The TMT bar is a distinct commercial commodity which is a marketable commodity having even a value addition. In common parlance, persons of the same trade are also giving different name to this commodity i.e. TMT bars. Thus, there is manufacture of TMT bars from TMT coils. The total manufacturing process has been mentioned in the show-cause notices dated 7th May,2003, 30th May, 2003, 9th July, 2003, 16th March, 2004, 18th October, 2004 and 25th February, 2005, issued by the appellant to the respondents. Ad valorem duty at the rate of 16% has been prescribed under the Central Excise Tariff Act,1985 as leviable and, hence, there will be huge difference in the duty because there is substantial value addition on such TMT bars. Learned counsel for the appellant relied upon the following decisions: (a) Kartar Rolling Mills v. Commissioner of Central Excise, New Delhi reported in 2006 (197) ELT 151 (SC) (b) Collector of Central Excise, Hyderabad v. M/s. Bakelite Hylam Ltd. reported in 1997 (91) ELT 13 (SC) On the basis of the aforesaid decisions, it is submitted by learned counsel for the appellant that the respondent no.1 is manufacturing TMT bars and TMT rods from TMT coils and the said items are falling under Sub-Heading 7214.90 of the Central Excise. TMT coil is an altogether different item falling within Sub-Heading 7213.90 of the Act, 1985 and this manufacturing process includes the process of de-coiling, straightening and cutting into size as per requirement. This aspect of the matter has not been properly appreciated by the CESTAT and, hence, order and judgment passed by the CESTAT dated 27th July,2006/31st July, 2006 in Appeal Nos. EDM-01-03 of 2005 deserves to be quashed and set-aside. It is further submitted that there is also sizable value addition in the product finally manufactured by the Respondent no.1. Counsel for the appellant has further submitted that the TMT coil cannot be used as it is and, therefore, further processing of TMT coil is must so as to manufacture TMT bars and TMT rods. It is also submitted by counsel for the appellant that TMT bars and TMT rods are manufactured by the Castings (India) INC at 115 percentage of the cost of production and there is contravention of the provision of Section 4 and 6 of the Central Excise Act, 1944 and violation of Rules 4,6,8,9,10,11 and 12 of the Central Excise Rules, 2002 and as there was evasion of central excise duty for the different periods, the aforesaid show-cause notices were issued and they were held liable for payment of excise duty as well as the interest and penalty etc. It has further been submitted that TMT bars and TMT rods have been cleared from the factory of Castings (India) Ltd. without payment of central excise duty. There is evasion of the duty by the Castings (India) Ltd. and, hence, the central excise duty of Rs. 57,54,29,470/- (amount involved in Tax Appeal No. 21 of 2007 and Tax Appeal No. 23 of 2007) was confirmed and equal amount of penalty was imposed upon Castings (India) Ltd. U/s 11 AC of the Central Excise Act,1944 to be read with Rule 26 of the Central Excise Rules, 2002. Penalty of Rs. 50,000/- was also imposed upon TISCO Ltd.-Respondent no.2. Interest at the appropriate rate has also been held as leviable by the respondent no.2. For Tax Appeal no. 22 of 2007 the excise duty assessed was Rs. 4,39,76,279/- and equal amount of penalty had been imposed upon Tisco Ltd. Jamshedpur and interest at the appropriate rate has also been imposed. It is submitted by counsel for the appellant that both the items viz. TMT coils as well as TMT bars and TMT rods are absolutely different items and are also covered by different Sub-Headings. TMT bars and TMT rods are manufactured from TMT coils by manufacturing process as stated herein above. This aspect of the matter has not been properly appreciated by the CESTAT hence, the judgment and order passed by the CESTAT deserves to be quashed and set-aside. Arguments Advanced On Behalf of Respondents
(3.) Learned counsel for the respondents has submitted that conversion of TMT coils into TMT bars and TMT rods is not manufacturing at all, even if, these two items are mentioned under different Sub-Headings of the Central Excise Tariff Act, 1985. It is further submitted that commercially no new article has been manufactured, even if, TMT coils has undergone some processes. It has further been submitted by counsel for the respondents, that in fact, there is no difference between TMT coils and TMT bars and rods. TMT coils are coiled for easy transportation etc. and nothing beyond that. For conversion of TMT coils into TMT bars and rods, the only processes undergone are: * de-coiling; * straightening and; * cutting into sizes By these processes, no change takes place which may result into commercially another item. It is submitted by counsel for the respondents that both Castings India Ltd. and Tata Ryerson Ltd. are the conversion agents/external processing agents of Tata Steel and they have been assigned with the job of conversion of TMT coils into TMT bars by undertaking, activities of de-coiling, straightening, and cutting or slitting into sizes, the said bars/steels and then they use to deliver the same to Tata Steel's Stockyards and for the said work Castings India and Tata Ryerson receive processing charges as per terms and conditions agreed. Thus, in fact, there is no manufacturing at all. This aspect of the matter has been properly appreciated by the CESTAT by passing order dated 27th July,2006/31st July, 2006 passed in Appeal Nos. EDM-01-03 of 2005. Counsel for the respondents relied upon the following decisions: (a) Faridabad Iron & Steel Trader Association v. Union of India reported in 2004 (178) ELT 1099 (DEL) (b) U.O.I. v. Faridabad Iron & Steel Trader Association reported in 2005 (181) ELT A 68 (SC) (c) Commissioner of C.Ex. Mumbai v. Rajpurohit GMP India Ltd. reported in 2008 (231) ELT 577 (SC) (d) Commissioner v. Bemcee Ltd. reported in 2010 (256) ELT A 16 (SC) (e) Commr. of C.Ex. Chandigarh-I v. Markfed Vanaspati & Allied Indus reported in 2003 (153) ELT 491 (SC) (f) Prabhat Sound Studios v. Additional Collector of Central Excise reported in 1996 (88) ELT 635 (SC) (g) Commissioner of C.Ex. Chennai-II v. Tarpaulin International reported in 2010 (256) ELT 481 (SC) (h) Commissioner of Central Excise v. S.R. Tissues Pvt. Ltd. reported in 2005 (186) ELT 385 (SC) (I) Servo-Med Industries Pvt. Ltd. v. Commissioner of C.Ex. reported in 2015 (319) ELT 578 (SC) (j) Commissioner of C.Ex. v. Tejo Engineering Services P.Ltd. reported in 2015 (322) ELT 418 (SC) (k) Satnam Overseas Ltd. v. Commissioner of Central Excise reported in 2015 (318) ELT 538 (SC) (l) Collector of Central Excise v. Technoweld Industries reported in 2003 (155) ELT 209 (SC) (m) Hindustan Poles Corporation v. Commissioner of C.Ex. reported in 2006 (196) ELT 400 (SC) (n) Metlex (I) Pvt. Ltd. v. Commissioner of C.Ex. reported in 2004 (165) ELT 129 (SC) (o) Aman Marble Industries Pvt. Ltd. v. Collector of C.Ex. reported in 2003 (157) ELT 393 (SC) (p) Commissioner of C.Ex. & Cus. v. Pan Pipes Resplendents Ltd. reported in 2006 (193) ELT 129 (SC) (q) Commissioner of C.Ex. v. Swastik Rayon Processors reported in 2007 (209) ELT 163 (SC) On the basis of aforesaid decisions, it is submitted by counsel for the respondents that merely because there is value addition, it does not mean that manufacture has taken place and, hence, there is no liability upon the respondents to make payment of central excise duty. It is also submitted that in view of the aforesaid decisions, even if there is cutting or sizing into proper shape, there is no manufacturing at all. In the facts of the present case also, there is only de-coiling, straightening and cutting into sizes of TMT coils giving shape of TMT bars and rods essentially there is no change at all and the commodity remains as it is. In fact, only for easy transportation, the TMT coils are brought into existence. Thus, it appears three processes of de-coiling, straightening and cutting into sizes, but, in fact, essentially, there is only one process of cutting of TMT coils for which TMT coils are bound to be de-coiled and are also bound to be straightened, otherwise cutting cannot be done. Thus, in fact, there is only one process i.e. cutting involved in the process undertaken by the conversion agent namely viz. Castings India Ltd. and hence, there is no commercially different item or commodity made by the Castings India Ltd. This aspect of the matter has been properly appreciated by the CESTAT while quashing and setting aside the order-in-original passed by the Commissioner Central Excise, Jamshedpur. It is also submitted by counsel for the respondents that value addition in this case is not, because of manufacturing of commercially another item. The present case is like a case reported in 1980 (6) ELT 343 (SC) which is referred in paragraph no. 17 of the judgment reported in 2015 (318) ELT 538 (SC) pertaining to washing and skinning of pineapple and the slices of pineapple were ultimately packed in canes after adding sugar as preservative. In the facts of the present case, there is no addition of any item like preservative, sugar, etc. It is only basically cutting and nothing beyond that and for easy cutting of the TMT coils firstly de-coiling is must then straightening and thereafter cutting. In fact, there is no change in the original commodity. No new commodity has been manufactured and, hence, these Tax Appeals may not be entertained by this Court as there is no substantial question of law involved in these Tax appeals. It is also submitted that merely because the aforesaid two commodities might have been covered under two sub-headings of Central Excise Tariff Act, 1985 that does not mean that manufacturing process is undertaken by the Castings India Ltd. unless there is Section note or Chapter note. Thus, what is to be appreciated is not the different Tariff entries,but, the manufacturing process, and by the said manufacturing process whether a commercially different item has been manufactured or not The test to be applied is: whether essential character of the product is changed or not In the facts of the present case, essential character of the TMT coil remain as it is. The issues which are raised in these Tax Appeals are no more res-integra as the same have already been decided in view of the aforesaid decisions of the Hon'ble supreme Court. Hence, these Appeals may not be entertained by this court. Reasons:;