SUBRAMANIAM ELECTRIC Vs. COMMISSIONER OF CENTRAL EXCISE,

JUDGEMENT

(1.) THIS appeal arises form order in Original No.46/96 dt.22.10.96 by which the Commissioner has held that the appellants were carrying on the activity of manufacture of a new product which is dutiable and exigible. The Commissioner has noted that the appellants were carrying out the activity of manufacturing steel tubular poles which is classifiable under chapter subheading 7326.90 of the CET Act as a SSI unit enjoying under Notification No.175/86 and 1/93. It is note that they were mostly doing job work for various customers by fabricating steel tubular poles from materials supplies to them. They also manufactured street light steel tubular poles from their own materials. The Department, after investigation, issued show cause notice calling upon them to explain as to why the process of "street light steel tubular poles" cleared by them without payment of duty should not be charged for duty, as they had suppressed the fact of its production and cleared it clandestinely. In the matter. It is also alleged that by not including the value of "base plates/brackets" and also "over time charges" collected over and above labour charges, actual labour charges collected, actual length of the street tubular poles cleared by them in their respective invoices alleged duty for a larger period can be collected.

(2.) THE appellants denied the allegation and contended that the activity carried out by them was not a process of manufacture. They contended that no new product arose while extending the length of the poles. The poles remained "as poles" and it was not exigible. The lengthening of pipe was only to convert it into a pole and it remained as a pole. and it remains as pole. They were drilling holes and fixing brackets to it. They were fixing three different size tubes to make into big pole, which did not result into a new commodity. However, the Commissioner negatived their contention and held that the process amounted to a process of manufacture and a new product came into existence they had suppressed the inclusion of its value in their clearances and hence they were liable to pay duty to Rs.52,951/ - under proviso to Section 11 A (1) of the CE Act and imposed equal amount of penalty under Rule 173Q of the CE Rules.

(3.) ARGUING of behalf of the appellant the Ld. Counsel reiterated the plea taken by the assessee before the Commissioner and submitted that the Revenue has not discharged their burden of proving that the activity resulted in manufacture and the new item was marketable. They were not marketing the poles as a new product and the 'pipes' were removed as 'pipes' only. He submits that they were not required to include the value of the clearances. The matter was covered by large number of judgements in their favour hence they carried a bona fide belief that the said activity did not amount to manufacture and hence larger period was not invocable.