1. The question for decision in this appeal, originally a Revision Application to Government of India, is the legality or correctness of demands of differential duty for Rs. 13,985.01 and Rs. 19,756.62 confirmed by the Assistant Collector of Central Excise, Bombay, by his order dated 2nd July, 1977 and upheld in appeal by the Appellate Collector of Central Excise, Bombay, by his order dated 17-3-78.
2. The demands against the appellant relate to the period 1-3-75 to 29-4-75. It appears that after Tariff Item 68 of the C.E.T. came into force, the appellants filed a classsification list in respect of the work of engraving on Copper Rolls of various sizes and designs done by them, classifying the goods under Tariff Item No. 68. It also appears that the appellants paid duty on the value of job work done by them. At the time of finalisation of the RT 12 Returns the Superintendent of Central Excise, inter alia, told the appellants that they had paid duty only in respect of job charges of engraving without taking into account the value of the rolls. The appellants were called upon to pay differential duty as already set out above on the value of copper rolls and not only on the job charges of engraving. The Assistant Collector by order dated 2nd July, 1977 declined to interfere with the order of the Superintendent of Central Excise. Before the Appellate Collector the appellants claimed benefit of Notification No. ] 19/75, dated 30-4-75. The notification, inter alia, deals with computation of duty in respect of job work which is to be calculated on the basis of the amount charged for the job work. The Appellate Collector held that the demand related to the period prior to the notification and the benefit under the notification could not be given retrospectively to the appellants.
3. At the hearing of the appeal Shri V.N. Deshpanday, learned Advocate for the Appellants, explained the nature of appellants' activities. The appellants receive copper rolls from textile mills for engraving designs on them. These rolls are commercially known as Copper Print rolls and are the property of the textile mills. The appellants receive these rolls for doing the job work of engraving. The Copper rolls received by the appellants are already duty paid. When the old design for one reason or the other is not required, the same copper roll is sent again and again to the appellants for engraving a new design. The same copper roll may be used six or eight times. The process done by the appellants is factually so was not disputed by the respondents' representative before us.
4. Shri Deshpanday submitted that the process of engraving carried on by the appellants does not constitute manufacture within the meaning of the Central Excises and Salt Act, 1944 and, therefore, no duty was chargeable against the appellants. He made it clear that in taking up this plea he was not claiming refund of duty already paid by the appellants but through this plea he was resisting the demand of differential duty raised against the appellants. He also submitted that the Notification No. 119/75 was clarificatory in nature and, therefore, its benefit should have been given to the appellants and duty demanded only on the job work charges and not on the value of rolls also.
5. On behalf of the respondents Shri S.C. Rohtagi strongly defended the orders passed by the lower authorities. He submitted that there was manufacture was not disputed by the appellants at the lower stages, whether or not there is manufacture is a question of fact and law and this point could not be urged at this stage. The lower authorities were right in holding that the Notification No. 119/75 operated respectively and could not be given effect to retrospectively and on that account the demands raised against the appellants could not be set aside.
6. We have carefully considered the arguments of the parties. We see no infirmity in the lower authorities denying the benefit of the notification to the appellants because admittedly the notification comes into force after the period of the subject demand i.e. on 30-4-75.
7. The appellant has, however, urged that in engraving designs on the copper print roll no manufacture takes place. The details of the process of engraving done by the appellants have been set out above and as already stated its factual correctness has not been disputed by the respondents. The Tribunal has wide powers to permit a party to raise a point not urged before both of fact and law, if such permission is considered proper and necessary in the interest of justice. When the process of engraving as given by the appellants is not disputed by the other party, the only question arising for decision is whether on these facts it can be said that manufacture of goods has taken place. Apart from this, the burden is primarily on the Revenue to show that manufacture of goods has taken place on which excise duty can be demanded. Merely because the appellants did not raise the plea earlier would not absolve the Revenue from discharging their burden of showing that in fact manufacture has taken place entitling them to make a demand of central excise duty. Considering all this we have granted leave to the appellants to raise the plea that on the given facts no manufacture takes place. In Union of India v. Delhi Cloth Mills case AIR 1963 S.C. 791 Supreme Court has held that manufacture involves bringing into existence a new substance and it does not mean merely producing some change in a substance. Further, under Section 2(f) of the Central Excises and Salt Act, 1944, manufacture includes any process incidental or ancillary to the completion of a manufactured product. In the instant case we find that the first engraving on virgin copper print roll by the appellants can be said to be process incidental or ancillary to the completion of a manufactured product and, therefore, the job work when done on the copper print rolls for the first time would fulfil the requirement of definition of manufacture as set out in the provision above, but when the same copper print rolls after the designs have withered or for some other reason are again sent to the appellants for engraving designs, it cannot be said that any goods emerge or a manufacture takes place.
8. In the view we take, the demands against the appellants should have been restricted to job work done on the virgin copper print rolls for the first time and not when the same rolls were sent again to the appellants. In taking this view we are fortified by a decision of this Bench in Appeal No. ED(SB) (T) A, No. 1433/82 (Order No. 421-B/84), dated 27th April, 1984 wherein the Tribunal held that re-shelling of roller shafts does not amount to manufacture for purposes of liability to duty under Tariff Item No. 68.
9. The demands raised against the appellants shall be restricted only to the first engraving of the virgin copper print rolls if done by them and not to subsequent engravings on the same roll. The appeal is disposed of in these terms and partly allowed.
10. I have carefully gone through the order of my learned brothers.
While I agree with the finding that Notification No. 119/75-C.E., dated 30-4-75 operated prospectively and not retrospectively. I am unable, with great respect, to agree with the finding given on the question as to whether there was manufacture when Copper Rolls were engraved by the appellants. The facts concerning the process of manufacture, presented before us during the period, do not, in my opinion, provide enough material to come to a decision on this point. Besides, this point was not agitated before the lower authorities. The question whether manufacture is involved in the process of engraving, is a mixed question of law and fact as observed by my learned brothers. I am, therefore, of the view that this question should not be considered at all at this stage. What is before us, concerns only the levy of duty for the period 1-3-75 to 29-4-75. The finding on the question of manufacture covers not only this period but also later period.In Union of India v. Delhi Cloth Mills AIR 1963 S.C. 791, what was laid down were only guidelines to decide whether or not manufacture takes place. I have already observed that the facts available before us are not enough to come to a conclusion on this question. I, therefore, do not give any finding as to whether the process of engraving the Copper Rolls amounts to manufacture, for the reasons that this ground was not raised before the lower authorities and there is not enough material before us for coming to a conclusion.