1. These three appeals arise under the following circumstances M/s.
Hindustan Cables Ltd., a Government of India Company, hereinafter called the appellants is engaged in the business of manufacturing telecommunication cables falling under T.I. No. 33-B of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter call the Central Excise Tariff) at its factory at Rupnarayan-pur, West Bengal. Appellants' factory possesses Central Excise licence for manufacture of telecommunication cables. Telecommunication cables manufactured by the appellants are required to be sheathed for the purpose of preventing ingress of moisture in the cables by means of lead alloy, which is nothing but lead mixed with 0.85% of antimony.
Such mixing is done by melting lead with antimony. The appellants claim that lead itself contains certain percentage of antimony but for the purpose of increasing the hardness further, 0.85% of antimony is mixed with lead by the process of melting the materials. The appellants contended that this mixing does not constitute manufacture. The material does not undergo any change in its essential nature and character and continues to remain basically lead both before and after mixing with antimony. No new and different Article emerges having distinct name, character or use. Even after mixing lead with 0.85 % of antimony be lead alloy so obtained is not commercially a different Article from lead. The appellants' contention is that there is no manufacture of goods and no question of Central Excise duty being leviable.
2. The appellants entrust the mixing of antimony and lead to other job workers, namely, M/s. Metal Smelting Co., Calcutta amongst others. The job workers do not possess Central Excise licence for manufacture of antimonial lead ingots. Central Excise authorities felt that appellants had engaged in manufacturing antimonial lead without holding an Excise licence for the purpose through the joo workers. Three show cause notices dated 21-5-1982,22-5-1982 and 21-5-1982 were served on the appellants, as under: calling upon them to show cause why penalty should not be imposed under Rule 173Q of the Rules and Central Excise duty amounting to Rs. 28,65,462.86 (basic 26,04,966.24 and S.E.D. 2,60,496.62) be not demanded from them for the period 1-4-1981 to 31-5-1982 under Rule 9(2) of the rules and Section 11A of the Act). These show cause notices are the subject matter of Order-in-Original No. 201-203 (27A) 82/Collr-62/92, dated 7-8-1982 passed by the Collector of Central Excise, Calcutta.) 3. Later another show cause notice dated 25-6-1982 (C.No.V. (27) (15) 148-CE/16928-30). similarly demanding duty amounting to Rs. 6,03,975.92 (basic Rs. 5,49,069.01 and S.E.D. Rs. 54,906.91) for the period 18-4-1981 to 25-5-82 was also served on the appellants. This show cause notice is the subject matter of the Order in-Original No. 229 (27A)/82/Collr-71/82, dated 13-9-1982 (Appeal No. 437/1982).
4. Another similar show cause notice dated 12-7-82 C.No. V27) 169-CE/ 82/17516D) calling upon the appellants to show against penalty and duty amounting to Rs. 22,61,233.51 (Basic Rs. 20,55,666.50 and S.E.D Rs. 2,05,566.65) for the period 23-7-1976 to 18-4-1981 was also served on the appellants (This show cause notice is subject matter of Order-in-Original No. 2240(27A)81/Collr-69/82, dated 13-9-1982).
5. The appellants in all the cases challenged the show cause notices and resisted the demands. The Collector of Central Excise, Calcutta, by his detailed order dated 7-8-1982 bearing No. 201-203 (27A) 82/Collr-63/82 held that the appellants without having central excise licences had engaged themselves in the manufacture of antimonial lead at the premises of the job workers when proforma credit under Rule 56A of the Rules was not permissible. The Collector called upon the appellants to pay duty of Rs. 28,65,462.86 and imposed a token penalty of Rs. 1/- (this is appeal No. 442/1982). By order No.229(27A)82/Collr. 71/82, dated 13-9-82 (subject order of appeal No. 437 he demanded Rs. 6,03,975.92 and a token penalty of Rs. 1/- was also imposed. By order No. 240(27A) 82/ Collr. 69/82 dated 13-9-1982, (subject order of Appeal No. 438/1982-B) a duty of Rs. 22,61,233.15 was demanded and token penalty of Rs. 1/- was also imposed. All these appeals are disposed of by this common order.
6. The main Order-in-Original is order No. 201-203(27A)82/Collr. 62/82, dated 7-8-1982 and the same is followed in other two cases bearing No.229 and 240, dated 13-9-1982.
7. At the hearing of the appeal, Shri R.N. Bajoria, Senior Advocate for the appellants contended that mixing of 0.85% of antimony with lead to further harden it did not result in manufacture as no new Article having distinct name, character or use came into existence. The product which came into existence by mixing antimony with lead still remained lead. The Article is commercially not a different Article from lead. He further argued that item No. 27A in the C.E.T. providing inter alia for levy of C.E.D. on lead unwrought including ingots, pigs, blocks, anodes, slabs, cakes and cast sticks was inserted in the C.E.T. by the Finance Bill, 1965. He further argued that the Central Board of Excise and Customs in its communication bearing F.No. 3/1/65-CX. III, dated 8-10-1965 clarified that "unwrought lead in any form converted from another form of unwrought lead, whether pre-excise or having paid the appropriate amount of duty, was not to be charged to duty under Item No. 27A of the said Tariff. It was further clarified that since all stocks of unwrought lead irrespective of form, available in the market would be either out of pre-excise stock or would have paid the appropriate amount of duty on import from abroad or when cleared from the smelting works, manufacturers producing lead cast stick etc. out of lead ingots or other forms of unwrought lead need not be brought under the Central Excise control or asked to take out a Central Excise licence. He contended that Government of India, Ministry of Finance by their further communication F. No. 5/2/65-CX. III, dated 10-1-1966, inter alia clarified that duty on lead alloy in unwrought form is recoverable in those cases only where the same are produced from ore by smelting and that, in the case of manufacturers producing alloys of lead in unwrought form out of duty paid or preexcise unwrought lead, no further duty becomes recoverable. This was again reiterated by Government of India, Ministry of Finance's F.No. 13/8/81-CX. V, dated 24-2-1982 and Trade Notice No. 54/1982,dated 24-3-1982, issued by the Collector of Central Excise, Pune circulates the same clarification.
Shri Bajoria argued that in any case the appellants were not the manufacturers of the antimonial lead. He reiterated that there was no manufacture as was clarified and borne out by the Memos and clarification mentioned above. Even if the Collector be correct in ignoring the Government of India's Circulars and the Trade Notices on the ground that as a quasi-judicial authority he was not bound to follow the same, he could not ignore orders No. 223-224-B, dated 27-7-1982 communicated under F.No. 194/171-72/82- AU (R) on the appeals of M/s. Indian Base Metals Co. (P)Ltd., against Order No. 171 (26B) 81-Collr-25/82, dated 5-3-1982 and No. 170(27A) 81-Collr-24/82, dated 5-3-1982. These two manufacturers were job workers of the appellants and in respect of them the same Collectorate had earlier passed similar orders. The Central Board of Excise and Customs by its order dated 27-7-1982 held that antimonial lead obtained by alloying duty paid pig lead and other alloying material namely antimony was in no circumstances liable to duty nor could penalty be imposed on the appellants. Shri Bajoria further argued that this order was passed by the Board in an appeal in quasi-judicial capacity and the Collector could not have ignored the same.
8. Shri V. Luxmi Kumaran, the learned SDR strongly defended the orders passed by the Collector of Central Excise. Both the parties cited a number of decisions on the point as to what is manufacture, who is a manufacturer and when the extended period of limitation would apply. In the view we take it is not necessary to make a detailed mention of these rulings.
9. In this case, the appellants gave duty paid lead and duty paid antimony 0.85% to the job workers for mixing the same. Tariff Item 27A "Lead" has an Explanation-I, which says "Lead" shall include any alloy in which lead predominates by weight over each of the other metals.
Therefore, lead alloy obtained as a result of mixing lead with antimony 0.85 %, with the aid of this explanation still remained lead.
Government of India, Ministry of Finance, Department of Revenue's Circular dated 24-2-1982 dealing with Notification No. 119/66-CE., dated 16-7-1966 relating to Copper and Copper alloys, after consulting the Ministry of Law, Justice and Company Affairs at the level of Secretary and reconsidering the earlier Circular No. 138/10/79-CX. IV, dated 22-6-1981 stated that the notification under reference would apply.to copper ingots etc., made from the various materials mentioned in the notification, even if other metals such as Zinc lead, tin or nickel have been added to it provided the copper contents therein predominates. Ministry of Law's advice was accepted by the Ministry of Finance. The circular, further applied mutatis mutandis in relation to goods specified in other tariff entries including T.I. 27A if in the manufacture of these goods other metals are also added as a technological necessity in combination with the base metals already specified in the tariff entries. It appears that the Ministry of Lav which expressed advice in the matter for the purpose relied on a decision of Supreme Court reported in 1977 E.L.T. 61. In this case the Supreme Court observ-ed if the intention of the Government were to exclude the exemption to duty paid pig iron when mixed with other meterials then the notification would have used expression "only" or "exclusively" or "entirely" in regard to duty paid pig iron.
10. While the learned Collector of Central Excise would be correct it saying that a Quasi-judicial authority is not bound by the instructions or direc-tions given by its superiors, we note that the appellants in their reply to the show cause notice had urged that similar matters had been decided by the Collector against them and that they had preferred an appeal to the Board of Excise and Customs, New Delhi and a copy of their appeal had been forwarded to the Collector. The appellants expected the decision from the Board on their appeal after some time.
They requested the Collector to keep the proceedings pending till decision on their appeal by the Board. In the circumstances, it would have been better if the learned Collector of Central Excise, Calcutta had kept the matter pending and not decided the case. However, we have now before us order dated 27-7-1972 No. 223-224-B passed by the Central Board of Excise and Customs in the case of M/s. Indian Base Metal Company Private Ltd. of the two appeals disposed of by the Board, one related to Antimonial lead ingot, arsenical antimonial lead and high copper antimonial lead. The Board in para 31 of the order observed that the Government of India had taken a stand that such alloy; would be covered by the respective item as Zinc or lead falling under item 26E or 27A of the Central Excise Tariff if the percentage of the respective base metal was more than 50 % in the alloys. The Board further observed that this naturally meant that since metal as well as its alloy were covered by the same item. and sub-item of the C.E.T there would be no manufacture of excisable goods different from those which were used as raw material. The order reiterated the Government's declared intention to collect the duty only in cases were these metals in unwrought form were manufactured from ore and if the metal in unwrought form was manufactured from the same metal in unwrought form, then the duty was not to be collected. In the case the Board further held that the goods in question were in no circumstances liable to duty nor could any penalty be imposed on the appellants. It appears to us that this order dated 27-7-1982 was not before the learned Collector of Central Excise when he passed the orders under appeal which are dated 7-8-1982 and 13-9-1982. It appears that then was some communication gap; otherwise there is no reason why the learned Collector should have ignored these orders passed by the Board in their quasi-judicial capacity. The learned Collector in fact in para IV of his discussion (page 17 of the Order-in Original No. 201-203) admits "though the decision taker by the Govt. of India, Ministry of Finance (Department of Revenue) or by the Board in their quasi-judicial capacity are binding on the lower quasi-judicial authorities".
11. To us the reasoning adopted by the Board and Government of India appear acceptable. While they are certainly not binding on the Tribunal, the Tribunal would not lightly ignore the same when they are not shown to be erone-ous or unreasonable. Accepting the reasoning in the Circular and the order we hold that preparation of ingots for duty paid lead in admixture with duty paid antimony to an extent of 0.85% does not constitute manufacture of lead ingots assessable under T.I.27A. In view of this finding, the other points urged like time bar, proforma credit under Rule 56A or who is the manufacturer, dc not survive for consideration.
12. As a result of foregoing discussion, we set aside the three orders No. 201-203 (27A)82/Collr. 63/82, dated 7-8-1982, No. 229(27A)82/Collr.
71/82, dated 13-9-1982 and 240 (27A)82/Collr. 69/82, dated 13-9-1982) passed by the Collector of Central Excise, Calcutta and allow the three appeals.