2. The appellants, at the outset, stated that their old name Geep Flashlight Industries Ltd. had been changed to Geep Industrial Syndicate Ltd. vide the certificate dated 20-8-1979 of the Registrar of Companies, U.P., Kanpur.
3. The dispute in this case relates to the question whether brass barrels of torches were classifiable as brass pipes and tubes under item 26A of the Central Excise Tariff during the period from 1-4-1971 to 31-1-1972 or not. The appellants showed a sample of the brass barrel in question and stated that these goods were manufactured by the appellants for captive consumption, that they were in unfinished condition, were not at all marketed by them and were, in fact, not marketable and hence they were not goods so as to attract the levy of central excise duty. They added that these brass barrels were commercially not known as pipes and tubes nor did they perform any of the accepted functions of pipes and tubes, namely, conveying of gas or fluid. They relied on AIR 1976 SC 800 and AIR 1977 SC 597 in general and on the Gujarat High Court judgment dated 23-2-1970 in special civil application No. 436 of 1966 in the case of M/s Parmar Engineering Works v. Assistant Collector Central Excise, Jamnagar and Ors. in specific.
They also referred to Government of India orders in revision reported as 1977 ELT J-33 and 1978 ELT J-593 in which the Government, relying on the Gujarat High Court judgment, held that brass cylinders of water pumps were not classifiable as pipes and tubes. They were frank enough to say that there was a contrary judgment of Allahabad High Court delivered in 1972 in the case of M/s Union Carbide (1978 ELT J 1). They sought to distinguish their case from this case of M/s Union Carbide on two counts-first, torch bodies under consideration of the Allahabad High Court in M/s Union Carbide case were made of aluminium while the subject torch bodies or barrels of the appellants were made of brass and, secondly, the Allahabad High Court had not applied the test of general marketability while the Supreme Court held later in AIR 1976 SC 800 that the marketability criterion was very important for deciding the question of dutiability of any product. They stated that the Allahabad High Court judgment was now in appeal before the Supreme Court and that the Supreme Court had stayed the operation of the Allahabad High Court judgment.
4. Without prejudice to their main pleas as above, the appellants made two further prayers. First, no profit could be added to the cost of manufacture to arrive at the assessable value of captive consumption goods under the old section 4 of the Central Excises and Salt Act, 1944 when the Valuation Rules, 1975 were not yet in force. Adding of profit in their case was bad in law on the further ground that the Assistant Collector had made an arbitrary addition of 5 per cent "as per instructions" and without assigning any reasons or giving any data.
Secondly, they requested that for giving set off of the duty already paid under exemption notification No. 213/63-CE, full weight of brass sheets taken for use in the manufacture of the subject brass barrels should be taken into account and not the net weight contained in the barrels. In other words, their prayer was that set off may be given for the quantity of the process scrap resulting in the course of manufacture of barrels from sheets.
5. The Department's representative conceded that for the set off full weight of the brass sheets taken for use in the manufacture of the subject barrels ought to be taken into account. He also agreed with the appellants that in making an addition of 5 per cent by way of profit to arrive at the assessable value as per instructions of some authority, the Assistant Collector did not apply his own mind to the matter. He requested the Bench to pass such orders as deemed fit in this matter.
But he resisted the substantive pleas of the appellants. For this, he relied on the Allahabad High Court judgment in the case of M/s Union Carbide and stated that this judgment related to tariff classification of the specific goods, namely, torch bodies, which were under consideration of this Bench. He maintained that the fact that the torch bodies in the Union Carbide case were made of aluminium while the appellants' torch bodies were made of brass was hardly material. He stated that the Allahabad High Court had not given up the test of marketability but had on the contrary proved by citing an actual instance of sale and purchase of torch bodies that torch bodies were not only a marketable intermediate product but were in fact marketed.
He laid stress on dictionary meaning according to which a pipe or a tube meant a hollow cylinder for conveyance of gas, water, vapour etc.
and stated that the function of conveyance of gas, water, vapour etc.
was not a must since even conduits used for electric wiring were also known as pipes and tubes. According to him, since the subject barrels had a hollow cylinderical shape, they were classifiable as pipes and tubes.
6. We have given our earnest consideration to the matter. Whether a pipe or tube is used for conveyance of gas, water, vapour etc. or as a conduit for electric wiring, it must possess the property of being open at both ends ; otherwise, it would be just a container. The sample shown to us during the hearing was closed at one end, obviously so because otherwise it would not be able to hold the battery cells placed inside the barrel. Such a barrel closed at one end can serve no purpose of a pipe or tube. If it were to be categorised as a pipe or tube just because it possesses a hollow cylindrical shape, then even steel drums and barrels, which are nothing but containers, too would have to be categorised as pipes or tubes which would be an absurd proposition.
Secondly, we find from the sample shown to us that the subject brass barrel does not have a uniform diameter throughout its length. Its front portion, occupying about one-third of total length, is expanded in a mushroom like shape in which the torch bulb, reflector and glass cover are fitted. Only the remaining two-thirds length possesses a uniform diameter. The Department has produced no evidence that these barrels are known in the commercial parlance as pipes or tubes. On the contrary, from whatever evidence has been laid before us, we find that the subject goods are known as torch bodies, torch barrels or torch cans etc. Further, the goods are specially designed to function as a component of torches and not as pipes or tubes. We, therefore, hold that the subject brass barrels of torches cannot be classified as pipes and tubes under item 26A(3) of the Central Excise Tariff. In view of this finding, it is unnecessary for us to go into the alternative pleas of the appellants relating to addition of profit and gross weight for the purpose of set off.
7. Accordingly, we allow this appeal with consequential relief to the appellants.