HINDUSTAN POLES CORPORATION versus COMMISSIONER OF CENTRAL EXCISE, CALCUTTA

Citation: [2006] 3 S.C.R. 461 · Decided: 27-03-2006 · Supreme Court of India · Bench: AR. LAKSHMANAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

HINDUSTAN POLES CORPORATION 
v. 
COMMISSIONER OF CENTRAL EXCISE, CALCUTTA 
MARCH 27, 2006 
[DR. AR. LAKSHMANAN AND DAL VEER BHANDARI, JJ.] 
Central Excises Act, 1944: 
Section 2(/)-Manufacture-Process of "welding" of electric resistant 
pipes/tubes of different diameters, which are duty paid, and purchased fi'om 
the open market, results in a new product-Whether amounts to 
"Manufacture "-Held, No. 
A 
B 
c 
Show-cause-notices issued by the Additional Collector of Central D 
Excise, Calcutta have been challenged by the appellant in these appeals. 
The said notice was issued on the ground that by the process of "welding" 
of electric resistant pipes/tubes of different diameters, which are duty paid, 
and purchased from the open market, results in a new product and, hence, 
is liable to excise duty under the Residuary Entry i.e. erstwhile Tariff Item E 
68 upto 27.2.1986, and thereafter under Tariff Item 7308 from 28.2.1986. 
Collector of Central Excise, Calcutta-I upheld the notices 30. 7.1991. 
Appeal against the abovesaid order filed before the CEGAT was also 
dismissed. Hence, this appeal. 
It was contended by the appellants that the process carried out is F 
mere joining of three pipes of different diameters with one another to 
obtain the desired length. This is done by a process of welding of pipes. 
The pipes do not lose their original character, and get converted into 
something, which is a commercially distinctive product. Pipes/poles do not 
lose their original character and identity as pipes. The pipes retain their G 
character as pipes, hence, no process of manufacture as per Section 2(1) 
of the Central Excise Act is carried out. According to the appellants, the 
duty paid pipes which are purchased by the appellants are classified under 
Tariff Item 26AA (iv) upto 27.2.1986 and thereafter under Tariff Item 
7306.90 as pipes from 28.2.1986 and as such no duty is payable by them. 
461 
H 
462 
SUPREME COURT REPORTS 
[2006] 3 S.C.R. 
A It was also contended that the essence of manufacture is the transformation 
of one item into another for marketable purpose. 
It was contended by the respondents that the process undertaken by the 
appellants was merely joining pipes of three different diameter, one with the 
other to desired length whereby no new goods and/or article other than pipes 
B does emerge out inasmuch as even after such process of joining the pipes 
one with the other they do not lose their identity as M.S. Welded pipes and 
thus does not attract the mischief of Section 2(1) of the Act, since the process 
of mere welding of pipes of three different diameter one with the other is not 
a process of manufacture within the meaning of Section 2(1) of the Act. 
c 
Allowing the appeal, the court 
HELD: 1.1. The process carried out by the appellants do not change 
the basic identity or original character of M.S. Welded Pipes to make it a 
new marketable product leading to manufacture as defined under Section 
D 2(f) of the Central Excise Act, 1944. And as such the activity of the 
appellants of merely joining of three pipes, one with other, of different 
dimensions to obtain a desired length can by no stretch of imagination be 
brought within the category of 'manufacture'. [475-8, C, Fl 
Shyam Oil Cake Ltd. v. Collector of Central Excise, Jaipur, (20051 
E SCC 264; Union of India v. Delhi Cloth and General Mill Co. Ltd., AIR 
(1963) SC 791; Devi Dass Gopal Krishnan and Ors. v. The State of Punjab 
and Ors., Sales Tax Cases XX (1967) page 430; Empire Industries Ltd. v. 
Union of India, AIR (1986) SC 662; Mis Ujagar Prints and Anr. v. Union of 
India and Ors., AIR (1989) SC 516; Commissioner of Sales Tax, Orissa and 
F Anr. v. Jagannath Cotton Company and Anr., (19951 5 SCC 527; Gramophone 
Co. of India Ltd. v. Collector of Customs, Calcutta, (20001 1 SCC 549; CCE 
v. Markfed Vanaspati and Allied Industries, [20031 4 SCC 184; CCE v. 
Technoweld Industries, (2003[ 11 SCC 798; Metlex (I) (P) Ltd., (2005) 1 
SCC 271; Aman Marble Industries (P) Ltd v. CCE, )2005) 1 SCC 279 and 
Rajasthan SEB v. Associated Stone Industries, [2000) 6 SCC 141, referred 
G 
H 
to. 
Indian Metals and Ferro Alloys v. CCE, [1991) Supp 1 SCC 125 and 
Bharat Forge and Press Industries v. CCE, [ 1990) l SCC 532, relied upon. 
2.1. The burden to prove manufacture is always on the Revenue. In 
the instance case the Revenue has completely failed to prove that the 
HINDUSTAN POLES CORPN. " COMMR. OF CENTRAL EXCISE. CALCUTTA (DAL VEER BHANDARI

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