SIDDHARTHA TUBES LTD. versus COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, INDORE (MP)

Citation: [2005] SUPP. 5 S.C.R. 851 · Decided: 16-12-2005 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Case Partly allowed
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Judgment (excerpt)

SIDDHARTHA TUBES LTD. 
v. 
COMMISSIONER OF CUSTOMS & CENTRAL EXCISE, INDORE 
(MP) 
DECEMBER 16, 2005 
[ASHOK BHAN AND S.H. KAPADIA, JJ.] 
Excise: 
A 
B 
Central Excise Act, 1944-Section 4-Assessabl~ value-Of m.s. C 
galvanized pipes-Pipes manufactured out of H.R. coils subjected to various 
processes including galvanization resulting in formation of m.s. galvanized 
pipes-Galvanization took place before the final product was cleared from 
the place of removal-It added to quality of the final product and increased 
its value-Held: Process of galvanization which gave value-addition was D 
incidental to the manufacture-Hence, cost incurred by assessee for 
galvanization includible · in assessable value of the m.s. galvanized pipes. 
Pipes manufactured out of H.R. coils were subjected to various processes 
including galvanization resulting in formation of m.s. galvanized pipes. 
Galvanization took place before the final product was cleared from the place E 
of removal, as defined under Section 4(4)(b). It added to quality oftlte final 
product and increased its value. 
In the present appeals which concerned the period May, 1994 to July, 
1996, the question which arose for consideration is whether the cost incurred p 
by assesee-appellant for galvanization was includible in assessable value of 
the m.s. galvanized pipes. 
Partly allowing the appeal, the Court 
HELD: 1.1. Value is the function of price under Section 4(4)(d)(i) of the G 
Central Excise Act, 1944. The concept of "valuation" is different from the 
concept of "manufacture". Under Section 3 of the Act, the levy is on the 
manufacture of the goods. However, the measure of the levy is the normal 
price, as defined under Section 4(1)(a) of the Act. (855-H; 856-AI 
851 
H 
852 
SUPREME COURT REPORTS (2005) SUPP. 5 S.C.R. 
A 
1.2. It is not disputed that galvanization as a process does not amount to 
manufacture. However, on facts, it has been found by the Commissioner that 
the process of galvanization has taken place before the product is cleared 
from the place of removal, as defined under Section 4( 4)(b ). Further, on facts, 
the Commissioner has found that galvanization has added to the quality of the 
B product. It has increased the value of the pipes. Hence, the costs incurred by 
the assessee for gal~anization had to be loaded on to the sale price of the pipes. 
Therefore, the cost had to be included in the assessable value of m.s. galvanized 
pipes. This Court does not find any error in the reasoning of the adjudicating 
authority. [856-B, CJ 
C 
1.3. The product cleared from the factory was m.s. galvanized pipes. 
Galvanization had given value addition to the m.s. pipes. The process of 
galvanization was incidental to the manufacture of the m.s. galvanized pipes 
and, therefore, the cost of that process was rightly included in the assessable 
value. No error is found in the concurrent findings recorded by the 
D Commissioner and by the Tribunal. (855-F, G; 857-G( 
Procter & Gamble Hygiene & Health Care Ltd v. Commissioner of 
Central Excise, Bhopal, (2005) 9 Scale 559 and Union of India & Ors. v. 
Bombay Tyre International Ltd, AIR (1984) SC 420, relied on. 
E 
Sidhartha Tubes Ltd v. Collector of Central Excise, (2000) 115 ELT 32 
and Hindustan Polymers v. C.C.E., (1989) 43 ELT 165, referred to. 
2. A penalty ofRs.10 lacs was imposed by the Commissioner. On appeal, 
it has been reduced to Rs. 7.5 lacs. No reasons have been given for imposing 
the penalty. The matter has arisen at the stage of assessment. The appellant 
F has succeeded, in showing that the cost of rubber rings (p.p.ri~gs) was not 
facludible in the assessable value of the m.s. galvanized pipes. The matter 
was, therefore, arguable. Hence, the penalty of Rs. 7.5 lacs is set aside. 
(857-H; 858-AJ 
G 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4247-4248 of 
2000 .. 
From the Judgment and Order dated 16.3.2000 of the Customs, Excise 
and Gold (Control) Appellate Tribunal, New Delhi in F.O. No. 152/2000-A and 
Misc.0. No. 36/2000-A in A. No. E/1183/97-A with E/Misc. No. 512of1999-
H A. 
I r r 
• 
SIDDHARTHA TUBES LTD. v. COMMR. OF CUSTOMS & CENTRAL EXCISE [KAPADIA, J. J 853 
J. Vellapally, Pradeep Aggaiwal, Ragevesh Singh for Sushi! Kr. Jain and A 
Ms. Pratibha Jain with him for the Appellant. 
G.E. Vahanvati, Solicitor General, Rajeev Dutta, T.A. Khan, Rupesh 
Kumar and P. Parmeswaran with them for the Respondent. 
The Judgment of the Court was delivered by 
B 
KAPADIA, J. The short que
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