COMMISSIONER OF CENTRAL EXCISE, JAIPUR versus M/S. HINDUSTAN ZINC LTD.

Citation: [2004] 3 S.C.R. 527 · Decided: 24-03-2004 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

) 4 
COMMISSIONER OF CENTRAL EXCISE, JAIPUR 
v. 
M/S. HINDUSTAN ZINC LTD. 
MARCH 24, 2004 
[S.N. VARIA VA AND H.K. SEMA, JJ.] 
Central Excise Act, 1944-Manufacture of anodes for the purpose of 
electrolysis for manufacture of zinc-Suppression of manufacture of anodes in 
A 
B 
the Classification list-Show-cause notice issued for payment· of duty and C 
penalty invoking extended period of limitation for wi/fitl suppression of facts-
Tribunal holding that there was no manufacture of anodes-Correctness of-
Held, anodes after conversion become a new product known in the market 
with a distinct name, character and use and marketable as such-Hence liable 
to excise duty---On facts, the extended period of limitation is rightly invoked 
by the Revenue. 
D 
Respondent-assessees are engaged in the manufacture of zinc, lead 
and products thereof. Zinc is manufactured by a process of"electrolysis. 
For electrolysis, the respondents manufacture cathodes and anodes. The 
cathodes are manufactured by welding Aluminium Header of a specific 
size with an Aluminium Sheet of a specific size and thereafter welding E 
Copper Tips on the Header for better conductivity. Aluminium Hooks are 
then welded on the Header for facilitating the lifting of Cathodes as and 
when desired. Anodes are manufactured by melting lead ingots containing 
specific quantity of silver and casting it in the required size. A header is 
then welded with the cast rolled plate. Respondent-assessees filed a F 
Classification list showing anodes and cathodes having headers .in respect 
of one of the units. In respect of another unit, they had filed a Classification 
list merely showing anodes and cathodes without headers on them. 
Revenue issued show-cause-notices to Respondent-assessees for levy 
of Central Excise duty and penalty for manufacture of cathodes and G 
anodes. Tribunal allowed the appeal of the respondent-assessees on the 
ground that there was no manufacture of cathodes and anodes; that the 
headers are attached to facilitate the use of aluminium or lead sheet in 
the process of electrolysis; that no new product with a distinct name, 
character and use has emerged; and that the headers are not marketable. 
527 
II 
528 
SUPREME COURT REPORTS 
[2004] 3 S.C.R. 
A Hence the appeal by the Revenue. 
B 
Respondent-assessees submitted that the headers were attached to 
keep the lead and aluminium sheets emerged in the cell for facilitation of 
the process of electrolysis; and that the Revenue was not entitled to invoke 
the extended period of limitation on the respondents. 
Allowing the appeals, the Court 
HELD: I. I. The lead and aluminium sheets by themselves cannot and 
do not act as electrodes. They become electrodes only after certain 
conversion process is undertaken. The lead and aluminium sheets are 
C converted into electrodes which is a new product known in the market 
with a distinct name, character and use. Respondent-assessees paid duty 
on the product at the other unit on the basis that there was manufacture. 
The Commissioner has also noted that the product is bought in the market 
by a company. This shows that the product is marketable. The Tribunal 
D has failed to notice this. It is a settled law that for a product to be 
marketable, there need not be actual purchase or sale. So long as a new 
and distinct commodity known in the market has come into existence, there 
is manufacture. The headers are attached in order to see that the lead and 
aluminium sheets become positive and negative electrodes so that current 
can pass through them. Without the headers, it would not be possible to 
E pass the current through the sheets. [530-C-F[ 
1.2. From the facts stated in the order of the Commissioner, there 
was conscious withholding of information by the respondent-assessees and 
thus the extended period of limitation has been rightly invoked. [53;3-·El 
f 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3252 of 1998. 
G 
H 
From the Judgment and Order dated 19.11.97 of Central Excise, Customs 
and Gold (Control) Appellate Tribunal, New Delhi in F.O. No. E/1614/97-B 
in A. No. E/4192 of 1992-B. 
WITH 
C.A. No. 2305 and 5632 of 2000. 
Ranjeet Kumar, Dileep Tandon, Sanjeev Sen and B.K. Prasad for the 
Appellant. 
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C.C.E. v. HINDUSTAN ZINC LTD. [VARIAVA . .I.] 
529 
A.R. Madhav Rao, Viswanath Shukla, V. Balachandran, Alok Yadav A 
~ 
and Rajesh Kumar for the Respondents. 
The Judgment of the Court was delivered by 
S. N. VARIA VA, J. Al
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