UNION OF INDIA Vs. BABUBHAI NYLCHAND MEHTA BOMBAY

JUDGEMENT

(1.) The respondent is a sole proprietor of a concern known as Neptune Water-proof Manufacturing Company and carries on business of making water-proof kraft paper. The respondent manufactures following products known as 'waterproof kraft paper' :

(2.) The respondent challenged the order of the Assistant Collector by filling Writ Petition No. 852 of 1981 under Article 226 of the Constitution of India. The petition was heard by Justice Mrs. Manohar and by judgment dated April 4, 1985 the order passed by the Assistant Collector was set aside. The learned Judge held that the process carried on by the respondents cannot be considered as a manufacture of a new commodity with a different name and different use. The learned judge in support of the claim relied upon the decisions of Madras High Court and Andhra Pradesh High Court, where identical question was considered. As a consequential relief, the learned Judge directed that the Department should refund the excise duty levied and recovered from the respondents as a result of the order dated February 16, 1981 passed by the Assistant Collector. The decision of the learned Single Judge is under challenge in this appeal.

(3.) Shri Lokur, learned counsel appearing on behalf of the appellants, submitted that the conclusion of the learned Single Judge that the process carried on by the respondents cannot be treated or considered as a manufacture of a new commodity with a different name and different use is not correct. The submission is devoid of any merit. The Supreme Court in the decision reported in 1978 ELT (J 336) (S.C.) = AIR 1968 S.C. 922 (S.B. Sugar Mills v. Union of India) observed while examining the question as to the meaning of expression "manufacture" under the Excise Act, that the word "manufacture" implies a change but every change in the raw material is not manufacture, there must be such a transformation so that a new and different article must emerge having a distinctive name, character or use. Shri Lokur submitted that the Assistant Collector came to the conclusion that the different items came into existence by the process undertaken by the respondents. The Assistant Collector observed that the original raw material was kraft paper and after process what was sold by the respondents in the open market cannot be considered or known as kraft paper as the different item sold had a different distinctive character, use and value. The learned Judge declined to accept this conclusion of the Assistant Collector by observing that there was no material produced by the Assistant Collector in support of the conclusion. We inquired from Shri Lokur as to what is the material on the basis of which such conclusion was drawn by the Assistant Collector, and the only answer was that the Collector must be knowing how the product is known in the market. It is impossible to accede to this submission. The Assistant Collector is not a trader or is not visiting the market every day to find out how the product is known in the market or even otherwise the Assistant Collector has not examined himself as a witness in the proceedings. In our judgment, the conclusion of the learned Single Judge that there was no material whatsoever before the Assistant Collector and no material was disclosed in the affidavit filed before the learned Single Judge is correct and deserves acceptance.