COLLECTOR OF CENTRAL EXCISE, BOMBAY-II versus KIRAN SPINNING MILLS, KOLSHET ROAD, THANE

Citation: [1988] 2 S.C.R. 1006 · Decided: 15-02-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed
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Judgment (excerpt)

A 
COLLECTOR OF CENTRAL EXCISE, BOMBAY-II 
v. 
KIRAN SPINNING 
MILLS, KOLSHET ROAD, THANE 
FEBRUARY 15, 198~ 
B 
[SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.] 
Central Excise and Salt Act 1944: Section· 35L & Ministry of 1 
Finance Notification dated December 22, 1972-'Tow' and 'Staple 
\ ·~ 
fibre'-Distinction between-Running length fibre (tow) cut into short 
-
length fibre (staple fibre)-Substance obtained-Polyester staple 
C 
fibre-Excise duty-Liability for-Taxable event under excise law is 
D 
'manufacture'. 
. -~ 
Word & Phrases: 'Tow'-'Staple fibre'-'Manufacture'-Mean-
ing of. 
The Central Excise Officers during the course of investigations 
t .,, 
made against M/s Swastik Investment Company, Bombay found that 
some of the consignments of the material described in documents as 
'crimpled uncut waste' were cleared from M/s Swadeshi Polytex 
Limited, Ghaziabad during the period from January, 1974 to 
E 
December, 1977, were purchased by the respondents and utilised by 
--f, 
them in the manufacture of 'polyester staple fibre'. 
F 
G 
The Collector held that the 'crimpled uncut waste' purchased by 
the respondents was in fact 'polyester fibre tow' and that the respon-
dents had carried on manufacture of 'polyester staple fibre' from tow 
and, as such, exigible to duty. 
Aggrieved by the Collector's Order the respondents filed an -~- ,, 
appeal before the Central Board of Excise and Customs. This appeal '..:'llf 
was transferred to the Customs Excise and Gold Control Appellate 
Tribunal in pursuance of s. 35-P of the Central Excises and Salt Act, 
1944. 
The Tribunal on an examination of the material and the conten-
tions came to the conclusion that what the respondents had purchased 
was already man-made-fibre but in running length, and that what they 
did in relation to it, was to cut it into. staple length after some manual 
H 
sorting and straightening and held that such cutting involved no 
1006 
COLLECTOR OF CENTRAL EXCISE v. KIRAN SPNG. MILLS 
1007 
y 
manufacture and hence no duty liability could be imposed. 
1 
In the Appeal by the revenue to this Court on the question: 
whether there was exigibility to taxation on the item manufactnred by 
the respondent. 
Dismissing the Appeal. 
HELD: l. There is a distinction between 'tow' and 'staple fibre'. 
'Tow' 'is fibre in running length and 'staple fibre' is obtained by cutting 
it into required short length. I 1009BI 
A 
B 
2. The taxable event under the Excise Law is 'manufacture'. C 
rl--:Mannfacture' means to bring into existence a new substance and does 
/ 
not mean merely to produce some change in a substance. I 10090 I 
' 
3. Etymologically the word 'manufacture' properly construed 
would doubtless cover transformation, bot the qnestion is whether the 0 
transformation in the instant case brings about fundamental change, a 
-+ 
new substance is brought into existence, or a new different article 
having distinctive name, character or use results from a particular 
process or a particular activity. I 1009D-EI 
In the instant case, it is not disputed that wbat the respondents 
r did, was to cut the running length fibre (tow) into short length fibre E 
(staple fibre). It indubitably brought a change in the substance but did 
not bring into existence a new substance. The character and use of the 
substance (man-made fibre) remained the same. By the change in the 
length of the fibre, the substance acquired a new name. But since the 
tariff entry recognised the single description 'man-made fibre' with no F 
further sob-division based on length of fibre and even without any 
distinct enumeration of the various forms of fibre by cutting long fibres 
,_,,..into short ones, the respondents did not bring into existence any new 
product so as to attract any levy under the same tariff entry. Even by 
cutting, the respondents obtained man-made fibre. Such cutting, there-
fore, involved no manufacture and, hence, no duty liability can be G 
)' 
imposed upon them. h009E-HJ 
y 
Union of India v. Delhi Cloth & General Mills, 11963] 1 Snppl. 
SCR 586; Empire Industries Ltd. & Ors. etc. v. Union of India & Ors. 
etc., [1985] Suppl. 1 SCR page 292 and Mis Ujagar Prints v. Union of 
India, [ 1986] Suppl. SCC 652, referred to. 
H 
1008 
SUPREME COURT REPORTS 
(1988] 2 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2891 'y 
of 1984. 
B 
From the Judgment and Order dated 28.2.84 of the Customs 
Excise and Gold Control Appellate Tribunal, New Delhi in Order 
No. 118/84-
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