M/S. O.K. PLAY (INDIA) LTD. versus COMMISSIONER OF CENTRAL EXCISE-II, NEW DELHI

Citation: [2005] 1 S.C.R. 1086 · Decided: 04-02-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Disposed off

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
MIS. O.K. PLAY (INDIA) LTD. 
v. 
COMMISSIONER OF CENTRAL EXCISE-II, NEW DELHI 
FEBRUARY 4, 2005. 
B 
[S.N. VAR!AVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] 
Central Excise Act, 1944 : 
Section 2(j)-Conversion of LDPE and HDPE granules into moulding 
C powder amounts to manufacture by virtue of Note 6(b) of Chapter 39 of 
Central Excise and Tariff Act, 1985. 
Section 2(d)-Mou/ding powder produced by powdering of granules-
Dutiabi/ity of-Held: The records show that from time to time assessee obtained 
moulding powder from the market-Moulding powder being marketable falls 
D within the term 'an excisable goods' hence liable to duty-Tribunal rightly 
classified the said product under Heading 39.01 of Central Excise and Tariff 
Act, 1985. 
Section I I-A-Demand-Extended period of limitation-Invocation of-
E Assessee producing powder by pulverizing granules-Department fully aware 
of the process undertaken by assessee-Factory regularly visited by the 
officers-Nothing to show basis of invoking extended period of limitation-
Demand being beyond limitation period liable to be set aside. 
Questions arising in the present appeal are whether the process of 
F conversion of granules into moulding powder in the manufacture of water 
tanks and toys by the appellant-assessee amounts to manufacture within 
the meaning of Section 2(t) of Central Excise Act, 1944 read with note 
6(b) of Chapter 39 of Central Excise and Tariff Act, 1985; whether the 
said powder was an 'excisable product' in terms of Section 2(d); whether 
there was a deliberate attempt on the part of asses£ee to evade payment 
G of duty for invoking extended period of limitation; and whether extension 
of period from 6 months to one year by virtue of Amending Act I 0 of 2000 
dt.12.5.2000 would apply to notices given prior to 12.5.2000. 
H 
Disposing of the appeals and remitting the matter to Com missioner 
(Adjudication), the Court 
1086 
.. 
' 
O.K. PLAY (INDIA) LTD. v. C.C.E. 
1087 
HELD : 1.1. The Second Clause of Section 2(1) of Central Excise Act, A 
1944 states that any process, which is specified in section/chapter notes of 
the Schedule to the Central Excise Tariff Act, 1985, shall amount to 
"manufacture". The intention of the Legislature was to levy excise duty 
on those acti\'ities also that do not result in any new commodity. 
11092-DI B 
1.2. Reading of Note 6(b) of Chapter 39 of Central Excise and Tariff 
Act, 1985, shows that blocks and powders are two different "primary 
i. 
forms" and if the block is pulverized into powder, the activity would 
amount to "manufacture" in terms of clause (ii) of section 2(1). Therefore, 
as a consequence of the new definition of 'manufacture" in terms of section C 
2(1), the activities which otherwise do not amount to "manufacture", can 
now be treated as "manufacture" and made liable to duty. (1093-A-BI 
2. The records maintained by the assessee show that on several 
occasions, the assessee had bought the moulding powder from the market, 
which indicates that moulding powder is marketable commodity and, D 
therefore, excisable in terms of section 2(d). The Tribunal rightly held that 
• .) 
the said powder was classifiable under Heading 39.01 of the 1985 Act. 
.. 
11093-CI 
3.1. The department had issued two notices dated 1.5.1997 and 
4.11.1997. Show-cause notice dated 1.5.1997 demanded duty from the E 
assessee for the period October, 1996 to March, 1997 whereas the show-
cause notice dated 4.11.1997 demanded duty for the period May, 1993 to 
September, 1996. As regards the show-cause Notice dated 4.11.1997, the 
assessee has maintained its record as per rule I 73G indicating on daily basis 
the opening and closing balances, the stock of raw-materials as well as the 
stock of pulverized powder and the use of pulverized process. The said F 
registers were certified from time to time by the officers of the department. 
The factory of the assessee was visited by the officers of the department from 
time to time. The assessee had assigned on several occasions their activity 
to job workers with the permission of the department, No objection was 
ever taken by the department. No evidence has been brought on record to G 
show as to on what basis the department has sought to invoke the extended 
period of limitation, particularly, when the department was fully aware of 
the process undertaken by the assessee for converting the granules into 
powder. In the circumstances, the Tribunal was right in directing the 
proceedi

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