UNION OF INDIA versus HINDU UNDIVIDED FAMILY BUSINESS KNOWN AS RAMLAL MANSUKHRAI, REWARI & ANR.

Citation: [1971] 1 S.C.R. 936 · Decided: 21-08-1970 · Supreme Court of India · Bench: VISHISHTHA BHARGAVA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

L 
UNION OF INDIA 
v. 
HINDU UNDIVIDED FAMJI,Y BUSINESS 
KNOWN AS RAl\fLAL MANSUKHRAI, REWAiU & ANR. 
August 21, I 970. 
[V. BHARGAYA AND K. S. HEGDE, JJ.J 
. 
, Central Excise & Salt Act I of 1944, s. 3 read with Item 26.4..(2) 
First. Schedule-Duty leviable on circles in any form or size-Uncut 
circles whet/Jer 
dutiable-Manufacture-Production 
of uncut 
circles 
A 
B" 
whether manufacture. 
c 
The respondents were manufacturers of utensils. 
They first prepared 
the alloys known as kansi & brass. 
These were then turned into billets 
which were rolled into uncut circles by the agents of the respondents. The 
uncut circles· were trimmed by the respondents and after further work on ~ 
them were converted into utensils. 
Under item 
26A ( 2) of the First · 
Schedule to the Central Excises and Salt Act I of J 944 excise duty· was 
leviable inter a/ia en circles in any form or size. 
The Union of fndia 
D 
imposed excise duty at the stage when the uncut circles were prepared on 
the view that these were manufactured circle;s in any form or size within 
the me;ming of the aforsaid item 26A. The respondents filed a suit to 
challenge the levy. 
Tuey contended that (!) only trimmed circles and 
not uncut circles were circles within the meaning of the item and (ii) 
that the uncut circles had not undergone any such changes as could be 
held to amount to manufacture. The suit was decreed by the trial court 
and the decree WdS upheld by the first appellate court and the High Court. 
E 
With special leave the Union of India appealed to this Court. Allowing the 
appeal, 
· 
· 
'HELD : (i) Item 26A clearly mentions the manufactures amongst 
others of circles in •ny from or size. 
The argument that only trimmed 
circles can be treated as circles and as ,finished product for purposes of 
item 26A could not be accepted because that item itself envisages excise 
duty being levied on •circles in any form or size'. 
Uncut circles are 
F 
certainly circles in any form or size. There is nothing in item 26A' from 
which an inference can be drawn that the intention of the legislature wa' 
to tax trimmed circles and not uncut circles. 
Further no evidence had 
been Jed to show that in the commercial ·Community these uncut circles are 
not known as circles. [939 B-G] 
, (ii) In item 26A the legislature has laid down tliat excise duty· shall 
h' leviable on hillets at a lower rate and on manufactures of cirelell a~· a, 
G 
hig.'Jer rate. 
The provision. itself makes it clear that the le~lature was.'. 
· aware that billets are converted into circles. and .it was decided that excise 
<luty should be leviable at all stage-S: . When the legislature used the word · 
'manufactu"e' in connection with circles after having taken account ·ot the 
fact that billets were alreadv subjected to excise dutv. it is obvious th,&t the 
· process, by which the billets were converted into circles was held by the 
1-.,dslS1.tUrP. to aml'l•1nt to m':lnufact•1re. 
The wdrd 'manufacture' i" 1de-
flned in s.2(f) of the Act "' includin~ any oroeess incicl~"tal or aocillarv 
H 
to the completion of a manufactured product. 
The rolling of a billet 
into a circle is certainly a process in the course of completion of the manu-
factured product viz. circ'e~. [941 F'Hl 
\ 
A 
B 
UNION v. H.U.F. BUSINESS (Bhargava, J.) 
937 
So far as the respondents were concerned they started the process Of 
manufacture of otensils by initially taking metals in crude form as raw 
materials. Two different kinds of materials in each case were mixed to-
gether to prepare alloys of kansi & brass. These alloys were then brought 
into the form of billets and later on the billets were rolled into circles. 
It could not be contended that the whole of this process could not be 
described . as manufacture of circles. (942 C-D] · 
Union of Indi,-, v. Dtlhi Cloth & General Mi/ls, (1963] Supp. I S.C.R. 
586 and South Pihar Sugar Mills Ltd. v. Union of India & Ors. [1968) 
3 S.C.R. 21. distinirtiished. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 887 of 
1968. 
C 
Appeal from tho judgment and decree dated July 25, 1967 
D 
E 
F 
of the Punjab ·and Harya,na High Court in Regula.r Second Appeal 
No. 910 of 1965. 
\ 
Niren De, Attorney-General and S. P. Nayar, for the appel-
nt.. 
;, . 
W. S. Barlingay, V. C. MJ1hajan and Hira Lal Jain, for res-
pondent No. 1. 
8'. Datta, for respondent No, 2. 
The Judgment of the Court was delivered by 
Bhargava J. This appeal by speciaI leave arises out of proceed-

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