Union Of India & Ors vs M/S Alembic Glass Indust. Ltd. & Anr

Union of India & Ors. -- Appellants

VERSUS

M/s Alembic Glass Industries Ltd. & -- Respondents Anr.

ORDER

These appeals, by special leave, are directed against the

final judgment and order dated 23rd January 2002 delivered by

the High Court of Gujarat at Ahmedabad in Special Civil

Application No.2528 of 1984. By the impugned judgment, the

High court has quashed orders dated 11th May, 1984 and 14th

May, 1984 whereby the Assistant Collector had cancelled the

approved price list and the revised ground plan respectively as

also the consequential show cause notices issued to the

respondent - assessee. While deciding the appeals in favour of

the assessee, the High Court has placed reliance on the decision 2

of this Court in Union of India and others Vs. J.G. Glass

Industries Ltd. and others1.

The assessee carries on the business of manufacturing

glassware as also the process of colour printing and decoration of

the glassware so manufactured. It appears that based on trade

notice No.MP/24/80 dated 8th February 1980, which in turn was

based on tariff advice No.2/80 dated 4th January 1980, the

assessee pleaded that the activity of printing and decorating

glassware, already manufactured, in a separate factory did not

amount to "manufacture" and, therefore, the value in relation to

the said process would not be includible for the purpose of levy of

Excise duty. It was argued that unless the said process brings

into existence a different commercial product, it cannot be said

to be a manufacturing process. It was also asserted that the

printing unit was separate from the main unit manufacturing

the glassware. A revised ground plan was placed before the

competent authority on 18th May, 1983. On 1st June, 1983, the

assessee also obtained a separate licence under the Factories Act,

1948 for the decorating unit. On 2nd June 1983, the

revised ground plan was approved by the competent 1 (1998) 2 SCC 32 3

authority and on 7th July, 1983, the fresh price list was

provisionally approved with effect from 3rd June, 1983. The

competent authority, after conducting enquiry finally approved

the fresh price list on 7th October, 1983.

On 11th May, 1984, the same authority who had approved

the price list and the revised ground plan cancelled the approval

of the price list. On 14th May, 1984, the approval of the revised

ground plan was also cancelled.

Being aggrieved, the assessee challenged the said two

orders before the High Court by way of a writ petition. As stated

above, the High Court, following the decision of this Court in

J.G. Glass Industries Ltd. and others (supra) has allowed the

petition and set aside both the said orders. Aggrieved thereby,

the revenue is before us in these appeals.

We have heard learned counsel for the parties.

Mr. Bhatt, learned senior counsel appearing on behalf of

the revenue, has submitted that since in the present case the

assessee had taken the matter directly to the High Court by way

of a writ petition, the High Court accepted the stand of the 4

assessee that the activity of decoration etc. was being carried out

in a separate premises without any verification of the stand of

the assessee. Learned counsel thus, contends that the ratio of

the decision of this Court in J.G. Glass Industries Ltd. and

others (supra) is not applicable on the facts of the present case.

We are unable to persuade ourselves to agree with learned

counsel for the revenue.

In order to decide whether or not a process amounts to

"manufacture" within the meaning of Section 2 (f) of the Central

Excise And Salt Act, 1944 (as it then existed), in J.G. Glass

Industries Ltd. and others (supra), this Court laid down a two-

fold test, viz., (1) whether by the said process a different

commercial commodity comes into existence or the identity of the

original commodity ceases to exist; and (2) whether the

commodity which was already in existence will serve no purpose

but for the said process. In other words, whether the commodity

already in existence will be of no commercial use but for the said

process. Applying the said two-fold test, the Court held that the

plain bottles were themselves commercial commodities and could

be sold and used as such. By the process of printing names or 5

logos on the bottles, the basic character of the commodity does

not change. They continue to be bottles and, therefore, it cannot

be said that but for the process of printing, the bottles will serve

no purpose or are of no commercial use. However, while holding

so, the Court drew a distinction between a case where the

printing on the bottles was also carried out in the same factory

where the bottles were manufactured and a case where the

printing on the bottles was being carried out in a separate unit.

The Court finally held that if the printing and decoration etc. on

such bottles was carried out in a premises different from that in

which the bottles were manufactured, the value of the printing

will not be includible while determining the assessable value of

the excisable goods for computing the excise duty.

In the present case, it is clear from the impugned judgment

that for accepting the stand of the assessee that it had a separate

unit for carrying out the process of decoration etc. on the

glassware, the High Court has taken note of the fact that the four

show cause notices issued after 21st May, 1984, pertained to the

period during which the goods were cleared by the assessee

under the price list finally approved on 7th October 1983, in 6

respect of a sesparate unit for which revised ground plan was

submitted and approved. This fact was not disputed by the

revenue before the High Court. In that view of the matter, no

fault can be found with the decision of the High Court, holding

that the issue stood concluded by the aforementioned decision of

this Court.

Therefore, the appeals, being devoid of any merit, are

dismissed leaving the parties to bear their own costs.

........................................J. [D.K. JAIN]

........................................J. [P. SATHASIVAM]

........................................J. [AFTAB ALAM]

NEW DELHI;

MAY 06, 2010.