SUPER CAN ORANGI TOWN, KARACHI VS CUSTOMS EXCISE AND SALES TAX, APPELLATE TRIBUNAL KARACHI, BENCH-I, 2006 PTD-SUPREME-COURT 2627 (2006)

(On appeal from the judgment, dated 23-9-2003 passed by High Court of Sindh at Karachi in Appeal No.58 of 2003).

Central Excise Act (I of 1944)---

----Ss. 2(25) & 3---Manufacture---Definition---Cutting-to-size of tin plates in order to make tin canes---Levy of duty on process of cutting-to-size of tin plates---Validity---Definition of "manufacture" as given in S.2(25) of Central Excise Act, 1944 would include numerous processes incidental as well as ancillary to manufacture of final product---Cutting into size was an essential process for achieving final product---No Can could be produced without cutting of tin to required size---Such process would fall within definition of "manufacture" being incidental to manufacture of final product---Excise duty had rightly been levied.

Collector of CE & ST (Central) Karachi v. Hilal Steel Industries (Pvt.) Ltd. 2001 PTD 3945 and Assistant Collector of Central Excise and Land Customs v. Orient Straw Board and Paper Mills Ltd. PLD 1991 SC 992 distinguished.

Rehan Hassan Naqvi, Advocate Supreme Court and K.A. Wahab, Advocate-on-Record for Petitioner.

A.A. Siddiqui, Advocate-on-Record for Respondent.

Date of hearing: 18th July, 2006.

JUDGMENT

SARDAR MUHAMMAD RAZA KHAN, J.---Messrs Super Can seek leave to appeal against the order, dated 23-9-2003 of a learned Division Bench of Sindh High Court whereby their Special Central " Excise Appeal No.58 of 2003 was dismissed, upholding the order, dated 26-7-2003 of the learned Customs, Excise and Sales Tax Appellate Tribunal, Karachi.

2. Brief facts of the case are that the petitioner was engaged in the licensed manufacture of metal containers under the name and style of Messrs Super Can. After the expiry of licence in June, 1998, the manufacture of tin containers was stopped, whereafter, it got engaged into cutting the tin plates to size and with the said cut-to size tin plates it got the containers manufactured from other licensed manufacturers, according to the specifications of its own customers.

3. Central Excise Authorities conducted a raid at their premises and spotted empty metal containers which the petitioner had got manufactured for its customers from Messrs S.S. Cans, Orangi Town, Karachi Excise duty was levied upon such cutting to size of tin plates considering the same to be a "manufacture" within the contemplation of section 2(25) of the Central Excise Act, 1944. All the forums, mentioned earlier, upheld such levy of excise duty.

4. Section 2(25) of the Act reads as follows:--

??????????? "2(25) "Manufacture" includes any process incidental or ancillary to the completion of a manufactured product and any process of remanufacture, ? remarking, reconditioning or repair and the process of packing or repacking such ??????????? product and, in relation to tobacco, includes the preparation of cigarettes, cigars, ????????? cheroots, biris, cigarette and pipe of 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 manufacture on his own account if those goods are intended for sale and, in respect of gold and silver and products thereof, also any person dealing in gold and silver and products thereof who, whether or not he carries out any process of ???? manufacture himself or through his employees or relatives, gets any process of ??????? manufacture carried out on his behalf by any person who is not in his employ, and ???????? any person so dealing in gold and silver and products thereof shall be deemed to ??????????? have manufactured for all purposes of this Act, all products of gold or silver in ??????? which he deals in any capacity whatever."

When the above said definition of manufacture is appreciated in the factual context of what the petitioner company produces or manufactures as final product, one realizes undoubtedly that cutting to size of tin plates is a process necessarily incidental to the completion of a finally manufactured product known as tin cans. Had this process been not attended to, no can could have been manufactured as a final product. The process of cutting-to-size of the tin, therefore, squarely falls within the definition of "manufacture", being incidental to the manufacture of final product.

5. A bare perusal of the definition would suggest that it is vast in description and includes numerous processes incidental as well as ancillary to the manufacture of final product. Thus, in our view, the duty was rightly levied and rightly upheld by the learned Tribunal as well as the learned High Court.

6. Learned counsel for the petitioner referred us to a judgment of this Court in Collector of CE & -ST (Central) Karachi v. Hilal Steel Industries (Pvt.) Ltd. 2001 PTD 3945 where the duty was levied on the slitting of M.S. Sheet, which the Department termed as "intermediary goods". The learned counsel before us claimed similarly between "slitting" in that case and cutting-to-size of tin sheets in the instant case. We have examined the judgment and are led to believe that the nature of process involved and its determination as "manufacture" is a question of fact depending upon the nature of the process resorted to. In the given circumstances of the case of Hilal Steel Industries (Supra), the process of slitting was determined neither to be a cause nor effect of making a new product or final product. The original character of goods even after slitting remained the same and it did not change the nature or the utility of the goods, keeping the final commodity not essentially different from the original one. In the instant case the cutting into size is an essential process for achieving the final goods. No cans could be produced c without cutting of the tin to the required size. The facts of the two cases are distinguishable.

7. The next case of Assistant Collector of Central Excise and Land Customs v. Orient Straw Board and Paper Mills Ltd. PLD 1991 SC 992 relied upon by the learned counsel for the petitioner is also distinguishable because in there, the pasting of straw board on each other or cutting them to required size was considered, not to have fallen within the definition of manufacture because, the process did not change the nature of final goods nor added completion to the manufactured goods in terms of quality or utility which remained the same.

8. The upshot of the above discussion is that the act in hand of cutting to size of tin in order to make a tin can is a process that falls within the meaning of manufacture as envisaged by section 2(25) of the Central Excise Act. It was rightly so determined and upheld by the learned High Court. There being no merit in the petition, it is hereby dismissed and leave to appeal refused.

S.A.K./S-57/SC????????????????????????????????????????????????????????????????????????????????????????????? Leave refused.