Facts

Assessee is engaged in the process of cold rolling of hot rolled stainless steel patta/patti on job-work basis. Purpose of cold rolling is only to reduce the gauge of the SS patta/patti. The Department had taken the view that this process amounts   to  “manufacture” as  per Section 2(f) of  the Central Excise Act, 1944 and that  the extended period of limitation was invokable under section 11A of that Act. There was a difference of opinion between the Judicial and Technical Member of the CESTAT. After reference to the Third Member, the entire process was taken  note of by the Third Member in detail and he held that the process amounts to “manufacture” and that theextended period of limitation was validly invoked.

Issue

Whether process of cold rolling of hot rolled strips amounts to “manufacture” and whether the extended period of limitation is invokable?

View

The Supreme Court affirmed the view of the Third Member which gave elaborate reasons for holding that the process amounts to “manufacture”. As far as extended period of limitation is concerned, the Court also upheld the view of the Tribunal which had held that several manufacturers which dealt with similar activity     to that of Assessee were treating the process as “manufacture” and that prior judgments of the Tribunal had held that the process amounted to “manufacture” and hence he could not claim that there wasbonafide belief in not levying duty.

Held

The process of cold rolling of hot rolled strips amounts to “manufacture” and the extended period of limitation is invokable. (CA No. 5784-5788 of 2007 and 9196- 9202 of 2012 dt. 14-12-2015)

Editorial : The view of the Tribunal seems to be influenced by the fact that the Tariff and the HSN seem to treat the process as “manufacture”, though other reasons are also given by the Tribunal. Again, while discussing the question of extended period of limitation, the Tribunal has taken the view that the Tariff having specifically treated the process as manufacture, the assessee could not have entertained bonafide belief that the process was not in fact manufacture. The Supreme Court has merely reproduced the judgment of the Tribunal  and affirmed  it without looking into the question whether the Tariff  can control the meaning     of the word “manufacture” in the Act. In Moti Laminates (1995) 3 SCC 23, the Supreme Court had held that the Tariff entries are irrelevant in deciding whether goods were manufactured or not.

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– Mahatma Gandhi