Central Excises Act (I of 1944)‑‑‑

‑‑‑‑Ss. 2(25) & 3(1)‑‑‑Tin containers‑‑‑Levy of excise duty‑‑‑Act of cutting tin plates to size, which were ultimately moulded and converted into containers, was a process incidental to manufacture of tin container, which was the final product‑‑‑Such act of cutting tin plates to size would amount to manufacture within definition of term "manufacture" as given in S. 2(25) of Central Excises Act, 1944.

Assistant Collector of Central Excise and Land Customs v. Orient Straw Board and Paper Mills Ltd. PLD 1991 SC 992 ref.

Chaudhry M. Iqbal for Appellant.

Nemo for Respondents.

Date of hearing: 23rd September, 2003.

JUDGMENT

MUHAMMAD MUJEEBULLAH SIDDIQUI, J.‑‑‑This appeal is directed against the order, dated 26‑7‑2003, passed by the learned Customs, Central Excise and Sales Tax Appellate Tribunal, Karachi in Central Excise Appeal No. CE‑56 of 2001. According to the appellant, the following questions of law arise out of the order of Tribunal, requiring our consideration:‑‑

"(1) Whether is the facts and circumstances of the case the learned Customs, Excise and Sales Tax Appellate Tribunal, Karachi Bench‑I is misconceived in holding that the item constitutes an excisable goods in terms of the charging section 3(1) of the Central Excises Act, 1944 when this time undisputedly does not appear in the First Schedule to Act?

(2) Whether in the facts and circumstances of the case the learned Customs, Excise and Sales Tax Appellate Tribunal, Karachi Bench‑I is misconceived in holding that the process of cutting the tin plates to the required sizes comes within the ambit of definition of the term `manufacture' as enumerated in section 2(25) of the Central Excises Act, 1944?

(3) Whether in the facts and circumstances of the case the learned Customs, Excise and Sales Tax Appellate Tribunal, Karachi Bench‑I misconceived in interpreting the process of cutting tin plates to required sizes as to be covered by the definition of the term manufacture as enumerated in section 2(25) of the Act contrary to the judgment of the Honourable Supreme Court in the case of Assistant Collector of Central Excise and Land Customs v. Orient Straw Board and Paper Mills Ltd. reported as PLD 1991 SC 993?

(4) Whether in the facts and circumstances of the case the learned Customs, Excise and Sales Tax Appellate Tribunal, Karachi Bench‑1 is misconceived in holding that the Appellants are liable to pay the differential amount of Sales Tax alongwith additional tax and penalty under sections 36,34 and 33(f) of the. Central Excise Act, 1944 respectively when cut to size tin plates due to their exclusion in the First Schedule to the Act are nQt an excisable goods, in terms of section 3(1) of the Act?"

Heard Mr. Choudhry Muhammad Iqbal, learned counsel for the appellant and perused the impugned order.

Succinctly stated the relevant facts as contained in the Memo. of Appeal are that the appellant was engaged in the manufacture of metal containers in the name and style of Messrs Super Can. He was a licence‑holder under the Central Excise Act and was registered under the category of cottage industry. The licence expired at the end of June, 1998 and thereafter, appellant stopped manufacturing tin container. The licence was not got renewed. The appellant started obtaining orders from the manufacturers of tin containers. He used to cut the tin plates to size and with the said `cut to size' tin plates used to get the containers manufactured from the duly licensed manufacturers, according to specifications of his customers. The Headquarters Intelligence Sales Tax and Central Excise, conducted a raid at the premises of the appellant and spotted empty metal containers of the paint company which the appellant had got manufactured for one of his customers from Messrs S.S. Cans Orangi Town, Karachi. The staff of the Central Excise and Sales Tax informed that the process of cutting the tin plates to size for manufacture of tin containers amounted to manufacture and consequently, it was liable to payment of custom duty. The appellant disputed the contention. The Excise staff insisted that since the appellant was charging sales tax at standard rates and making adjustment of in put tax under normal sales tax regime, he was required to pay excise duty as well. Subsequently, a notice was served on the appellant on 15‑7‑2000, by the Deputy Superintendent of Central Excise and Sales Collectorate, calling upon the appellant to produce the excise record. The appellant took plea that he was not required to maintain such record. Ultimately a show‑cause notice was served stating that the manner in which the appellant has got metal containers manufactured and supplied to its customers falls within the ambit of manufacture as defined in subsection (25) of section 2 of the Central Excise and Sales‑tax and that the appellant was liable to pay central excise duty in terms of section 3 of the Act, read with S.R.O. No.455(1)/96, dated 13‑6‑1996. The appellant contested the matter before Collector Sales .Tax and Central Excise (Adjudication‑III) Karachi, who rejected the plea taken by the appellant. The appellant still dissatisfied preferred appeal before the Customs, Excise and Sales Tax Appellate Tribunal, Karachi, who partially accepted the appeal. Being still dissatisfied, the appellant has preferred this appeal rising, the questions of law reproduced in the earlier part of this judgment.

A perusal of the impugned judgment shows that the learned Tribunal has decided the issue by placing reliance on the provisions contained in subsection (25) of section 2 of the Central Excise Act 1944, which reads as follows:‑‑

"(25) `manufacture' includes any process incidental or ancillary to the completion of manufactured product and any process of remanufacture, remaking reconditioning or repair and the process of packing or repacking such product; and, in relation to tobacco, includes the preparation of cigarette, cigars, cheroots, biris, cigarette and pipe or hookah tobacco, chewing tobacco, or snuff, , and the word `manufacturer' shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacturer on his own account if those goods are indeed for sale.."

The finding of the learned Tribunal is as follows:‑‑

"The reading of the above would show that this is a vast definition. It includes any process incidental or ancillary to the completion of the manufactured product and also includes any person who engages in their production or the manufacture on 'his own account if those goods are intended for sale. The appellant according to his own statement purchased his tin plate and cut them to the required sizes. This alone to our mind is sufficient to prove as far as the definition of manufacture would show that he is a manufacturer. Subsequently he got the Cans manufactured from other units and sold ' them through his factory. Thus in our mind he is engaged in the production or manufacture of goods through another manufacturer/contractor and falls within the definition of manufacturer as contained in section 3 of the Central Excise Act. It is further observed that the appellants were registered as manufacturer as the registration certificate of the Collector Sales Tax and Central Excise (East) would show. The Central Excise duty has been worked out from their own Return, which they have submitted for the purposes of sales tax and accordingly they are directed to pay the same."

A bare perusal of the definition of the term `manufacture' contained in section 2(25) of the Central Excise Act, 1944, shows that any process incidental or ancillary to the completion of, manufactured product is included in the definition of word `Manufacturer". The learned counsel for the appellant is not able to deny that the act of cutting the tin plates to size which are ultimately moulded and converted into containers, is a process incidental to the manufacture of tin container which is the final product. In view of this undeniable fact, we are of the opinion that the learned Tribunal has rightly held that the act of cutting the tin plates to size amounts to manufacture within the definition of term `manufacturer' given in section 2(25) of the Central Excise Act, 1944. There is no substantial question of law requiring interpretation by this Court and consequently, the appeal stands dismissed in limine.

After concluding of arguments by the learned counsel in Court, the appeal was dismissed by a short order. These are the detailed reasons in support thereof. .

S.A.K./S‑355/KAppeal dismissed