LexM/S. PRACHI INDUSTRIES versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH
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[2008] 5 S.C.R. 560 M/S. PRACH! INDUSTRIES .,._ A V. COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH (Civil Appeal Nos. 3621-25 of 2002) B MARCH 28, 2008 (S.H. KAPADIA AND 8. SUDERSHAN REDDY, JJ.) Central Excise Act, 1944; s. 2(f): Manufacture - Swaging of tubes whether amounts to c manufacture - Held: Manufacture of a product means any process incidental/ancillary to the completion of manufacturing of a product - Finished product so obtained must be of distinguishable identity in the form of physical shape, size and use - In the present case, swaging imparts a change of lasting D character to the plane MS-tubes - It undergoes a change both in terms of form/shape and user - MS tubes being used to ~ carry water whereas work piece, the product obtained after swaging of MS tubes, used as decorative item/in auto-rikshaw - Hence, the process of swaging amounts to manufacture ul E s. 2(f) of the Act- Central Excise and Tariff Act, 1985 - Heading 73.06. Words and Phrases: 'Metal Forming' and 'swaging' - Meaning of, in the F context of s. 2(f) of the Central Excise Act, 1944. Assessee buys duty-paid MS tubes, cut into requisite }; ' lengths and put in the swaging machine in which dies are fitted which imparts "folds" to the flat surface of the tube. The question which arose for determination in these G appeals was as to whether swaging constitutes manufacture in terms of Section 2(f) of the Central Excise Act, 1944. ' Dismissing the appeals, the Court -+ H 560 MIS. PRACH! INDUSTRIES v. COMMNR. OF CENTRAL 561 EXCISE, CHANDIGARH - HELD: 1.1 With the introduction of the Central Excise A and Tariff Act, the definition of "manufacture" has been substituted to include "any process - incidental or ancillary to the completion of a manufactured product". Therefore, on analyzing Section 2(f) of the Central Excise Act, 1944 it becomes clear that the word "process" must B be in relation to manufacture. (Para - 8) [565-G; 566-A] 1.2 Incidental process must be an integral part of manufacture resulting in a finished product which has to be of a different physical shape, size and use. The said process must impart a change of lasting character to the c original product or raw-material. After the process, a new finished product must come into existence. It comes into existence only when it acquires a distinguishable identity. (Para - 8) [566-B, C] 1.3 Once the process amounts to manufacture, the D ~ fact that the goods belong to the same entry would not be relevant. In the present case, the swaging machine contains dies of different sizes and patterns. Swaging is a process which imparts a change of lasting character to E the plane MS pipe or tube by use of dies which exists in the machine. After the process of swaging the identity of the plane MS pipe or tube undergoes a change both in terms of form, shape and user. (Para - 8) [566-C, 0, E] 2.1 According to Production Technology, Metal F '·,>,. Forming is a manufacturing process by which the size or shape of plane pipe or tube is changed by the application of forces that produce stress in the part of tube or pipe which is greater than the yield strength and less than the fracture strength of the material. (Para - 9) [566-E, F] G 2.2 Forming Operation in which the diameter of bars i or tubes is changed by repeated blows of shaped ·+ hammers is called as "Swaging". (Para -10) [567-A, B] Production Technology by O.P. Khanna - referred to. H 562 SUPREME COURT REPORTS [2008] 5 S.C.R. A 2.3 Production Swaging Operations are commonly performed on rotary swaging machines. Swaging has proved to be an economical-production method for forming shapes confined to a portion of the total length of a given pipe or tube, by tapering, pointing, reducing or B sizing. Swaging provides a pattern or contour, with peaks and valleys, depending upon the desired configuration. Therefore, even in matter of classification, distinction is made between pipes and tubes on one hand and hollow profile on other hand. (Paras - 12 &13) [567-F; 568-A, BJ C Dictionary of Technical Terms by F.S. Crispin - referred to. 2.4 In the present case, the assessee has assigned distinct code numbers and distinct design numbers for 0 different shapes of profiles (pattern or contours). This aspect has not been considered by the adjudicating authority which decided the matter in favour of the assessee. (Para - 14) [568-C, DJ 2.5 The rotary s
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