HANSA METALLICS LTD. Vs. UNION OF INDIA (UOI)

JUDGEMENT

(1.) WHETHER the process of corrugation of metallic sheets amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 (for short, the Act) is the question which arises for determination in this petition filed by the petitioner for quashing the letter dated 3 -7 -2000 issued by the Superintendent, Central Excise, Range -II, Derabassi, District Patiala (respondent no. 5) requiring it to obtain licence under Rule 174 of the Central Excise Rules, 1944 (for short, the Rules). The petitioner has also prayed for directing the respondents to clear the goods, i.e., galvanised corrugated sheets (for short, GC sheets) manufactured by it without insisting on payment of duty under the Act.

(2.) THE petitioner is engaged in the processing of metallic sheets as its factory situated at village Samalheri. It purchases duty -paid sheets and zinc from domestic market and undertakes the activity of galvanisation and corrvigation on the said sheets. In 1998, it applied for registration under the Act. The competent authority issued registration certificate on 29 -4 -1998. On that very day, the petitioner's representative submitted letter to respondent No. 5 for withdrawal of the registration by contending that in view of the law laid down by the Supreme Court in Gujarat Steels Tubes Ltd. v. State of Kerala , 1981 (42) E.L.T. 513 and by the Gujarat High Court in Zaverchand Gaekwad (P) Ltd. v. Union of India and circular No. /94 -C.E., dated 9 -2 -1994 issued by the Central Board of Excise and Customs, New Delhi (for short, the Board), galvanisation of steel strips does not amount to manufacture within the meaning of Section 2(f) and, therefore, no duty is payable by it. No order appears to have been passed by the concerned authority on that application, but after about 2 years, a team of the officers of Central Excise Department visited the factory of the petitioner and detained 142.260 MT of galvanised corrugated sheets on the ground of violation of Rules 9(1), 33, 173, 174 and 226 of the Rules. The same were handed over to Shri Ram Murti Mukhriya, General Manager (Works) on supurdginama. The petitioner made representations dated 2 -6 -2000 and 26 -6 -2000 for release of the goods by contending that galvanisation and corrugation does not amount to manufacture within the meaning of Section 2(f) of the Act but, instead of releasing the goods, Inspector (Prevention), Central Excise, Chandigarh seized the detained goods on 10 -7 -2000 under Section 110 of the Customs Act, 1962 and again handed over the same to the Director of the petitioner on supurdginama.

(3.) THE respondents have not controverted the petitioner's assertion that galvanisation of metallic sheets does not amount to manufacture within the meaning of Section 2(f) of the Act, but they have controverted its claim for exemption by contending that the process of corrugation does amount to manufacture within the meaning of the said section. In the written statement filed on behalf of the respondents, it has been averred that the process of corrugation of plain and galvanised sheets brings into existence a new product having different characteristics and marketability with a different name and, therefore, it amounts to manufacture within the meaning of Section 2(f) of the Act. According to them, the corrugated galvanised sheets (which are also known as G.C. sheets in the market) have a different commercial identity and use and the price thereof is higher than the plain metallic sheets or galvanised metallic sheets. They have further averred that the galvanised plain sheets are commonly used in the manufacture of desert coolers, boxes, trunks etc., whereas the galvanised corrugated sheets are used in roofing, shelter etc. and their classification under the Central Excise Act, 1944 is also different. The respondents have also sought dismissal of the writ petition as premature by asserting that final order has not been passed in pursuance of the show cause notice Annexure R. 1, dated 22 -11 -2000 issued by the Deputy Commissioner, Central Excise, Chandigarh.