REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4055-4056  OF 2009

COMMISSIONER OF CENTRAL EXCISE,  BANGALORE-II

— APPELLANT

VERSUS

M/S OSNAR CHEMICAL PVT. LTD. — RESPONDENT

WITH  

CIVIL APPEAL NO. 5633 OF 2009

AND

CIVIL APPEAL NO. 7142 OF 2010

JUDGMENT

D.K. JAIN, J.:

1. This batch of appeals by the revenue, under Section 35L(b) of  

the Central Excise Act, 1944 (for short “the Act”) arises out of  

final  orders  dated  23rd December,  2008  in  Appeal  No.  

E/379/2007; 25th September, 2008 in Appeal Nos. Excise/522 &  

523/2007  and  28th October,  2009  in  Appeal  No.  E/225/2009  

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passed  by  the  Customs,  Excise  &  Service  Tax  Appellate  

Tribunal  South  Zonal  Bench,  Bangalore  (for  short  “the  

Tribunal”).  By the impugned orders  in  cross-appeals  by the  

revenue  and  the  assessee,  the  Tribunal  has  held  that  the  

mechanical mixing of polymer with heated bitumen does not  

amount  to  manufacture  of  a  new  commercially  identifiable  

product and therefore, is not exigible to Excise duty under the  

Act.  

2. Since these three appeals  involve a common question of law,  

these  are  being  disposed  of  by  this  common  judgment.  

However,  in  order  to  appreciate  the  controversy,  the  facts  

emerging from C.A. Nos. 4055-4056 of 2009, which was treated  

as the lead case, are being adverted to.

The respondent in this appeal (for short “the assessee”) is  

engaged in  the supply  of  Polymer Modified Bitumen (for  short  

“PMB”).   We  may  note  that  in  one  of  the  appeals  (C.A.  

No.5633/2009),  the  assessee  additionally  supplies  Crumbled  

Rubber  Modified  Bitumen  (for  short  “CRMB”),  stated  to  be  a  

different kind of modifier.  The assessee entered into a contract  

with one M/s Afcons Infrastructure Ltd.  (for  short  “Afcons”) for  

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supply of PMB at their work site at Solur Village, Viswanathpura  

Post,  Bangalore.   As per the agreement,  the base bitumen and  

certain additives were to be supplied by Afcons to the assessee  

directly  at  the  site,  where  the assessee,  in  its  mobile  polymer  

modification  plant,  was  required  to  heat  the  bitumen  at  a  

temperature  of  160˚C  with  the  help  of  burners.  To  this  hot  

bitumen,  1%  Polymer  and  0.2%  additives  were  added  under  

constant  agitation,  for  improving  its  quality  by  increasing  its  

softening point and penetration.  The process of agitation was to  

be  continued  for  a  period  of  12  to  18  hours  till  the  mixture  

becomes  homogenous  and  the  required  properties  were  met.  

The  said  bitumen in  its  hot  agitated  condition  was  mixed with  

stone aggregates which was then used for road construction.  The  

resultant product was considered to be a superior quality binder  

with  enhanced  softening  point,  penetration,  ductility,  viscosity  

and elastic recovery.   

3. ‘Bitumen’ is classifiable under Chapter Sub Heading 271320.00  

and  ‘Polymers’  are  classifiable  under  Chapter  Sub  Heading  

390190.00  of  the Central  Excise Tariff  Act,  1985 (hereinafter  

referred to as “the Tariff Act”).  The relevant tariff items read as  

follows:

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4. The assessee had been paying Central Excise duty on the PMB  

processed at their factory in Mumbai but had not paid the same  

for the conversion done at the work site. Consequently, a show  

cause  notice  was  issued  to  them  by  the  Commissioner  of  

Central  Excise,  Bangalore  (hereinafter  referred  to  as  “the  

Commissioner”),   demanding duty in respect  of  PMB falling  

under sub-heading 271500.90 of the Tariff Act, for the period  

from  18th August  2004  to  19th September  2006.  The  

Commissioner  adjudicated  upon the  said  show cause notice  

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“Tariff Item Description of goods

2713 Petroleum  coke,  petroleum  bitumen  and  other  residues  of  petroleum  oil  or  of  oils  obtained  from bituminous minerals.

2713 20 00 Petroleum bitumen

2715 Bituminous  mixtures  based  on  natural  asphalt,  on  natural  bitumen, on petroleum bitumen, on  mineral tar or on mineral tar pitch  (for  example, bituminous mastics,  cut backs)

2715 00 90 Other

3901 Polymers  of  ethylene,  in  primary  forms

3901 90 Other ”

and vide Order-in-original, dated 23rd April 2007, held that the  

aforesaid  process  carried  out  by  the  assessee  amounted  to  

manufacture  of  PMB  in  terms  of  Section  2(f)  of  the  Act,  

irrespective of the fact whether such process was carried out  

on their own account or on job work basis and therefore, was  

dutiable. He accordingly, confirmed the demand indicated in  

the show cause notice.  Aggrieved thereby, the assessee filed  

an appeal before the Tribunal.  Reversing the decision of the  

Commissioner,  the Tribunal  has  come to  the conclusion that  

since PMB cannot be bought and sold in the market as it is fit  

for  use only in a  molten condition,  at  a  temperature  around  

160˚C  and  resultantly  cannot  be  stored  unless  kept  in  

continuous agitated state @ 100˚C so as to avoid separation of  

polymer and bitumen; the process carried out by the assessee  

does  not  amount  to  manufacture.   A  similar  view  has  been  

expressed  by  the  Tribunal  in  other  orders  which  are  the  

subject matter of these appeals by the revenue.

5. Mr. Arijit Prasad, learned counsel appearing for the revenue,  

vehemently  argued  that  having  regard  to  the  nature  of  the  

process involved, PMB and CRMB are different from bitumen.  

According to the learned counsel, ordinary bitumen is heated  

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upto a temperature of 200˚C, in the Polymer modification plant;  

to  this  heated  mixture,  polymer  is  added  and  samples  are  

taken; if the samples, are found to be satisfactory, additives are  

added  and  the  PMB  is  either  stored  or  dispatched.  It  was  

submitted  that  the  end  products,  viz.  PMB  and  CRMB  are  

different  from bitumen,  inasmuch as  polymers  and additives  

are the raw materials consumed in the process of manufacture  

of  the said final  products and are therefore,  covered by the  

definition of the term “manufacture” in Section 2(f) of the Act.  

To buttress his submission that PMB and CRMB are exigible to  

Excise  duty,  both  falling  under  a  specific  entry,  learned  

counsel referred to the Tariff Act, whereunder, while bitumen  

is  classifiable  under  Chapter  Sub  heading  271320.00,  and  

polymer is classifiable under Chapter Sub Heading 390190.00,  

the finished products,  PMB and CRMB are classifiable under  

Chapter Sub Heading 271500.90.  In support of his submission  

that PMB and CRMB are commercially known in the market for  

being  bought  and  sold  and  therefore,  satisfy  the  test  of  

marketability which is one of the essential  conditions for the  

purpose of levy of Excise duty, learned counsel commended us  

to  the decisions  of  this  Court  in    Medley Pharmaceuticals   

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Limited  Vs.  Commissioner  of  Central  Excise  &  Customs,   

Daman1 and  Nicholas  Piramal  India  Ltd.  Vs.  Commnr.  Of  

Central Excise, Mumbai2.  It was also urged that Circular No.  

88/1/87-CX.3, dated 16th June, 1987, issued by the Department  

of  Revenue,  Ministry  of  Finance,  clarifying  that  a  slight  

modification of the grade or quality of bitumen, brought about  

by the process  of  air  blowing to duty paid bitumen did not  

amount  to  manufacture,  was  wrongly  relied  upon  by  the  

Tribunal as it had subsequently been modified by Circular No.  

88/1/88-CX.3, dated 1st July, 1988, wherein the said department  

had clarified that  duty would be chargeable on blown-grade  

bitumen.  

6. Per  contra,  learned  counsel  appearing  on  behalf  of  the  

assessees,  led  by  Mr.  S.K.  Bagaria,  senior  advocate,  while  

supporting  the  decision  of  the  Tribunal,  fervently  submitted  

that  based  on  the   documents,  evidence  and  materials  on  

record,  the Tribunal  has found, as a fact,  that  the process of  

mixing an insignificant dose of polymer with duty paid bitumen  

only enhanced the quality of bitumen and did not amount to  

manufacture  and  therefore,  in  the  absence  of  any  plea  of  

1 2011 (263) E.L.T. 641 (SC) 2 2010 (260) E.L.T. 338 (SC)

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perversity,  the finding does not warrant  any interference by  

this  Court.   In  support  of  the  proposition,  learned  senior  

counsel  placed  reliance  on  the  decisions  of  this  Court  in  

Commissioner of Central Excise, Bangalore Vs. Ducksole (I)   

Ltd. & Ors.3 and Commissioner of Central Excise, Delhi-III   

Vs. Uni Products India  Ltd. & Ors.4.

7. Learned  senior  counsel  vehemently  argued  that  the  

mechanical process of adding polymer and additives to heated  

bitumen to bring into existence the so-called new substance,  

known as  PMB,  did  not  amount  to  ‘manufacture’  in  terms of  

Section  2(f)  of  the  Act.  It  was  explained  that  by  the  said  

process, only the grade or quality of bitumen is improved by  

raising its softening point and penetration,  for improving the  

quality  of  the  road;  but  even  with  the  improved  quality,  

bitumen remained bitumen with the same end use.  It was the  

say  of  the  learned  counsel  that  a  mere  improvement  in  the  

quality did not amount to manufacture, as ‘manufacture’ takes  

place only when there is a transformation of raw materials into  

a  new  and  different  article,  having  a  distinctive  name,  

character and use, which is not the case here as the end use of  

3 (2005) 10 SCC 462 4 (2009) 9 SCC 295

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both  the  articles  remained  the  same.  In  support  of  the  

proposition,  learned  senior  counsel  commended  us  to  a  

plethora  of  decisions  of  this  Court,  including  M/s.  

Tungabhadra  Industries  Ltd.  Vs. The  Commercial  Tax  

Officer, Kurnool5, Commissioner of Central Excise, Gujarat   

Vs. Pan  Pipes  Resplendents  Limited6,  Crane  Betel  Nut   

Powder  Works Vs. Commissioner  of  Customs  &  Central   

Excise, Tirupathi & Anr.7 and Union of India & Ors. Vs. Delhi  

Cloth & General Mills Co. Ltd. & Ors.8.

8. It  was  contended  that  since  the  period  involved  in  these  

appeals is post substitution of clause (f) in Section 2 of the Act  

by  Act  5  of  1986,  which  gives  an  extended meaning  to  the  

expression “manufacture” by including in terms of sub-clause  

(ii) to clause (f), any process “which is specified in relation to  

any goods in the Section or Chapter notes of the First Schedule  

to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting  

to  manufacture”,  the  said  provision  would  be  applicable.  

However,  wherever  the  legislature  intended  to  give  an  

extended  or  artificial  meaning  to  the  said  expression  in  

5 1961 (2) SCR 14 : AIR 1961 SC 412 6 (2006) 1 SCC 777 7 (2007) 4 SCC 155 8 1977 (1) ELT (J199) (SC)

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relation to any goods, it has clearly specified it.  According to  

the learned counsel, since the addition of polymer or additives  

to the bitumen has not been specified in the Section or Chapter  

notes of the Tariff Schedule as amounting to manufacture, the  

amended definition is of no avail to the revenue.  In support of  

the contention, heavy reliance was placed on the decisions of  

this Court  in  Commissioner of  Central  Excise, New Delhi-I   

Vs. S.R.  Tissues  Pvt.  Ltd.9 and  Shyam  Oil  Cake  Ltd.  Vs.  

Collector of Central Excise, Jaipur10.

9. Relying on the two afore-mentioned Circulars, F.No. 88/1/87-

CX.3,  dated  16th June  1987 and F.No.88/1/88-CX.3,  dated  1st  

July 1988, issued by the Department  of  Revenue, Ministry of  

Finance,  clarifying  that  blown  grade  bitumen  produced  by  

oxidation  of  straight  grade  bitumen  is  not  liable  to  duty;  

learned senior counsel submitted that the present case is on a  

much better footing than the blown grade bitumen, inasmuch  

as, unlike oxidation, where chemical change takes place, in the  

mixing  of  polymer  and  bitumen,  no  chemical  change  in  

bitumen takes place, and therefore, PMB cannot be subjected  

to Excise duty as a new commercial commodity.  Additionally,  

9 2005 (186) E.L.T. 385 (SC) 10 2004 (174) E.L.T. 145 (SC)

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reliance  was  also  placed  on  Circular  No.623/14/2002-CX.,  

dated 25th February, 2002, wherein  the Central Board of Excise  

and Customs has clarified that  the process of  preparation of  

Hot  Asphalt  Mix  used  in  making  roads  does  not  amount  to  

manufacture as contemplated under Section 2(f) of the Act.  

10. It was argued that merely because bitumen (the basic material)  

and PMB (the end material) are specified under two different  

headings, it cannot be presumed that the process of obtaining  

PMB automatically constituted manufacture, unless in fact there  

has been a transformation of bitumen into a new and different  

product or  alternatively,  the Section Notes or Chapter  Notes  

created  a  deeming  fiction  by  providing  an  artificial  or  

extended meaning to the expression ‘manufacture’ in respect  

of the goods in question.  In support of the proposition, learned  

counsel placed reliance on the decisions of this Court in  S.R.  

Tissues  Pvt.  Ltd  (supra),  Commissioner  of  Central  Excise,   

Chennai-II  Vs.  Tarpaulin  International11, Shyam  Oil  Cake  

Ltd.  (supra),  Commissioner of  Central  Excise, Mumbai  Vs.  

Lalji  Godhoo & Co.12, Commissioner  of  Central  Excise Vs.   

11 2010 (256) E.L.T. 481 (SC) 12 2007 (216) E.L.T. 514 (SC)

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Indian  Aluminium  Co.  Ltd.13 and Hindustan  Zinc  Ltd.  Vs.  

Commissioner of Central Excise, Jaipur14, wherein it was held  

that merely because the raw materials and the finished product  

fall  under  two different  tariff  entries,  it  cannot  be presumed  

that  the process of  obtaining the finished product from such  

raw materials automatically constituted manufacture.   

11. Learned  counsel  also  strenuously  urged  that  even  if  it  is  

assumed that the said process amounted to manufacture, still  

PMB cannot be subjected to excise as it  is not commercially  

marketable.  It was argued that for levy of Excise duty, the twin  

conditions  of  ‘manufacture’  and  ‘marketability’  have  to  be  

satisfied cumulatively.  In support of the proposition, reliance  

was placed on the decisions of this Court in  Hindustan Zinc  

Ltd.  (supra),  Indian  Aluminium  Co.  Ltd. (supra)  and  Lalji   

Godhoo & Co.  (supra).  Learned counsel also contended that  

the burden to prove that  the process  in question constitutes  

manufacture  and  that  the  goods  so  manufactured  are  

marketable  as new goods,  known to  the market,  lies  on the  

revenue and the same has not been discharged in the present  

case.  To support the contention, reliance was placed on Lalji   13 (2006) 8 SCC 314 14 (2005) 2  SCC 662

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Godhoo & Co.  (supra),  Metlex (I) (P) Ltd.  Vs.  Commissioner  

of Central Excise, New Delhi15;  Hindustan Poles Corpn.  Vs.  

Commissioner  of  Central  Excise,  Calcutta16 and  HPL  

Chemicals  Ltd.  Vs.  Commissioner  of  Central  Excise,   

Chandigarh17.   

12. Lastly,  the  learned  counsel  stressed  that  in  the  light  of  the  

decisions of this Court in  Commissioner of Central Excise &   

Customs  Vs.  Tikatar Industries18, Commissioner of Central   

Excise, Navi Mumbai Vs. Amar Bitumen & Allied Products   

Private  Limited19 and  Commissioner  of  Central  Excise,   

Mumbai Vs. Tikitar  Industries20,  the issue  raised  by  the  

revenue  in  these  appeals  is  no  longer  res-integra, and  

therefore, all the appeals deserved to be dismissed.

13. Mr.  Laxmi  Kumaran,  learned  counsel  appearing  for  the  

assessee  in  Appeal  No.7142  of  2010,  while  adopting  the  

arguments  advanced by  Mr.  Bagaria,  emphasised  that  apart  

from  the  fact  that  in  his  case  the  assessee  was  mixing  the  

additives  at  the site  and not  in  a  factory,  the  percentage  of  

15 (2005) 1 SCC 271 16 (2006) 4 SCC 85 17 (2006) 5 SCC 208 18 2006 (202) E.L.T. 215 (S.C.) 19 2006 (202) E.L.T. 213 (S.C.) 20 2010 (253) E.L.T. 513 (S.C.)

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polymer or  additives added to  bitumen was inconsequential  

for determination of the issue at hand, as the predominant test  

was whether the treated bitumen underwent any change in its  

characteristics so as to acquire a new commercial identity.  In  

support,  learned  counsel  referred  to  McNicol  &  Anr.  Vs.  

Pinch21, wherein Darling J., delivering the concurring majority  

opinion observed that:  

“You can only make one thing out of another. I  think  the  essence  of  making  or  of  manufacturing  is  that  what  is  made shall  be  different  thing  from  that  out  of  which  it  is  made.”   

In other words, the counsel submitted that the same test namely,  

whether the product that emerges is something different from the  

goods with which it is made, was observed to be the determining  

factor.  If  bitumen,  after  its  processing  with  additives  and  

modifiers, remains bitumen; although it is known as PMB, then no  

new product emerges. It was asserted that in the present case, the  

revenue had failed to prove that with the addition of polymer or  

additives,  bitumen  had  undergone  any  change  in  its  chemical  

composition and commercial identity.  According to the learned  

counsel,  if  the  treated  bitumen  is  not  kept  at  a  particular  21 1906 (2) K.B. 352

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temperature, bitumen and polymer get separated and revert to  

their original state, which shows that no chemical reaction takes  

place when both the commodities are mixed.

14. Thus, the question which falls for consideration in all these  

appeals is whether the addition and mixing of polymers and  

additives to base bitumen results in the manufacture of a new  

marketable commodity and as such exigible to Excise duty?

15. The expression ‘manufacture’ defined in Section 2(f) of the Act,  

inter alia includes any process which is specified in relation to  

any goods in the Section or Chapter Notes of First Schedule to  

the Tariff Act. It is manifest that in order to bring a process in  

relation to any goods within the ambit of Section 2(f) of the Act,  

the same is required to be recognised by the legislature as  

manufacture in relation to such goods in the Section notes or  

Chapter notes of the First Schedule to the Tariff Act.  Therefore,  

in  order  to  bring  petroleum  bitumen,  falling  under  CSH  

27132000,  within  the  extended  or  deemed  meaning  of  the  

expression ‘manufacture’, so as to fall under CSH 271500900,  

the process of its treatment with polymers or additives or with  

any  other  compound  is  required  to  be  recognised  by  the  

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legislature as manufacture under the Chapter notes or Section  

notes to Chapter 27.  

16. Dealing with the aspect of extended or artificial meaning of the  

expression ‘manufacture’  in Section 2(f)  of the Act in  Shyam  

Oil Cake Ltd. (supra), this Court had held as under :-

“16.  Thus,  the  amended  definition  enlarges  the  scope of manufacture by roping in processes which  may  or  may  not  strictly  amount  to  manufacture  provided  those  processes  are  specified  in  the  Section or Chapter notes of the Tariff  Schedule as  amounting  to  manufacture.   It  is  clear  that  the  Legislature realised that it was not possible to put in  an  exhaustive  list  of  various  processes  but  that  some methodology was required for declaring that  a particular process amounted to manufacture. The  language of the amended Section 2(f) indicates that  what  is  required  is  not  just  specification  of  the  goods  but  a  specification  of  the  process  and  a  declaration that the same amounts to manufacture.  Of course, the specification must be in relation to  any goods.

XXX         XXX            XXX                   XXX

XXX         XXX            XXX                   XXX

24. In this case, neither in the Section Note nor in  the Chapter Note nor in the Tariff Item do we find  any  indication  that  the  process  indicated  is  to  amount  to  manufacture.  To  start  with  the  product  was edible vegetable oil.  Even after the refining, it  remains  edible  vegetable  oil.   As  actual  manufacture  has  not  taken  place,  the  deeming  provision  cannot,  be  brought  into  play  in  the  

16

absence  of  it  being  specifically  stated  that  the  process amounts to manufacture.”

17. Then again, in S.R. Tissues Pvt. Ltd. (supra), a question arose  

whether slitting and cutting of toilet tissue paper on aluminium  

foil  amounted  to  manufacture  under  Section  2(f)  of  the  Act.  

Answering  the  question  in  the  negative,  this  Court  had  

observed thus :-

“15…..In order to make Section 2(f) applicable, the  process  of  cutting/slitting  is  required  to  be  recognized  by  the  legislature  as  a  manufacture  under  the  chapter  note  or  the  section  note  to  Chapter 48. For example, the cutting and slitting of  thermal  paper  is  deemed  to  be  “manufacture”  under Note 13 to Chapter 48.  Similarly, Note 3 to  Chapter  37  refers  to  cutting  and  slitting  as  amounting  to  manufacture  in  the  case  of  photographic goods.  However, slitting and cutting  of toilet tissue paper on aluminium foil has not been  treated as a manufacture by the legislature.  In the  circumstance,  Section  2(f)  of  the  Act  has  no  application.”

18. In the present case, a plain reading of the Schedule to the Act  

makes it  clear that  no such process or processes have been  

specified in the Section notes or Chapter notes in respect of  

petroleum bitumen falling under Tariff Item 27132000 or even  

in  respect  of  bituminous  mixtures  falling  under  Tariff  Item  

27150090  to  indicate  that  the  said  process  amounts  to  

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manufacture. Thus, it is evident that the said process of adding  

polymers and additives to the heated bitumen to get a better  

quality  bitumen,  viz. PMB  or  CRMB,  cannot  be  given  an  

extended meaning under the expression  manufacture in terms  

of Section 2(f) (ii) of the Act.  

19. We  may  now  examine  whether  the  process  in  question,  

otherwise amounts to manufacture under the expansive Section  

2(f) of the Act.  It is trite to state that “manufacture” can be said  

to have taken place  only when there is transformation of raw  

materials  into  a  new  and different  article  having  a  different  

identity,  characteristic  and use.   It  is  well  settled  that  mere  

improvement in quality does not amount to manufacture.  It is  

only  when  the  change  or  a  series  of  changes  take  the  

commodity to a point where commercially it can no longer be  

regarded as the original commodity but is instead recognized  

as a new and distinct article that manufacture can be said to  

have taken place. In this behalf the following observations by  

the  Constitution  Bench  of  this  Court  in  Tungabhadra  

Industries (supra) are quite apposite :

“In  our  opinion,  the learned Judges of  the  High  Court laid an undue emphasis on the addition by  

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way of  the absorption of  the hydrogen atoms in  the process of hardening and on the consequent  inter-molecular changes in the oil. The addition of  the  hydrogen  atoms  was  effected  in  order  to  saturate  a  portion  of  the  oleic  and  linoleic  constituents   of  the oil  and render  the oil  more  stable  thus  improving  its  quality  and  utility.  But  neither mere absorption of other matter, nor inter- molecular changes necessarily  affect the identity  of  a  substance as  ordinarily  understood………… The  change  here  is  both  additive  and  inter- molecular,  but  yet  it  could  hardly  be  said  that  rancid groundnut oil is not groundnut oil.  It would  undoubtedly be very bad groundnut oil but still it  would be groundnut oil and if so it does not seem  to accord with logic that when the quality of the oil  is  improved  in  that  its  resistance  to  the  natural  processes  of  deterioration  through  oxidation  is  increased, it should be held not to be oil.”

                           (Emphasis supplied by us)

20. In  Delhi Cloth & General Mills Co. Ltd.  (supra), yet another  

Constitution  Bench,  exploring  the  concept  of  manufacture  

echoed the following views :

“14……The word ‘manufacture’  used as a verb is  generally  understood  to  mean  as  “bringing  into  existence  a  new  substance”  and  does  not  mean  merely “to produce some change in a substance”,  however minor in consequence the change may be.  This distinction is well brought about in a passage  thus  quoted  in  Permanent  Edition  of  Words  and  Phrases, Vol. 26, from an American judgment. The  passage runs thus:-

“Manufacture implies a change, but every  change is  not  manufacture  and yet  every  change  of  an  article  is  the  result  of  

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treatment,  labour  and  manipulation.   But  something  more  is  necessary  and  there  must be transformation; a new and different  article  must  emerge  having  a  distinctive  name, character or use.”                              (Emphasis supplied by us)

21. In  S.R. Tissues Pvt.  Ltd. (supra),  the issue for consideration  

was whether the process of unwinding, cutting and slitting to  

sizes of jumbo rolls into toilet rolls,  napkins and facial  tissue  

papers amounted to manufacture.  While holding that the said  

process  did  not  amount  to  manufacture  this  Court  inter-alia,   

held as under :

“12…..However,  the  end-use  of  the  tissue  paper in the jumbo rolls and the end-use of the  toilet  rolls,  the  table  napkins  and  the  facial  tissues  remains  the  same,  namely,  for  household  or  sanitary  use.  The  predominant  test in such a case is whether the characteristics  of  the  tissue  paper  in  the  jumbo  roll  enumerated  above  is  different  from  the  characteristics of the tissue paper in the form of  table napkin, toilet roll and facial tissue. In the  present case, the Tribunal was right in holding  that the characteristics of the tissue paper in the  jumbo  roll  are  not  different  from  the  characteristics of the tissue paper, after slitting  and cutting,  in the table napkins,  in the toilet  rolls and in the facial tissues.”

   (Emphasis supplied by us)

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22. In Deputy Commissioner Sales Tax (Law), Board of Revenue   

(Taxes),  Ernakulam  Vs.  Pio  Food  Packers22,  a  three  Judge  

Bench  of  this  Court,  while  deciding  whether  conversion  of  

pineapple  fruit  into  pineapple  slices  for  sale  in  sealed cans  

amounted to manufacture, observed as follows:-

“4……Commonly,  manufacture  is  the  end  result  of  one  or  more  processes  through  which the original commodity is made to pass.  The nature and extent of processing may vary  from one case to  another,  and indeed there  may  be  several  stages  of  processing  and  perhaps a different kind of processing at each  stage.   With  each  process  suffered,  the  original  commodity  experiences  a  change.  But it is only when the change, or a series of  changes,  take  the  commodity  to  the  point  where  commercially  it  can  no  longer  be  regarded  as  the  original  commodity  but  instead  is  recognized  as  a  new  and distinct  article that a manufacture can be said to take  place.  Where there is no essential difference  in  identity  between  the  original  commodity  and the processed article it is not possible to  say that one commodity has been consumed  in the manufacture of another. Although it has  undergone a degree of processing, it must be  regarded as still retaining its original identity.

         (Emphasis supplied by us)” 23. Having  considered  the  matter  on  the  touchstone  of  the  

aforesaid legal position, we are of the view that the process of  

mixing polymers and additives with bitumen does not amount  

to manufacture.  Both the lower authorities have found as a fact  

22 1980 (6) E.L.T. 343 (SC)

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that  the said process merely resulted in the improvement of  

quality of bitumen.  Bitumen remained bitumen.  There was no  

change in the characteristics or identity of bitumen and only its  

grade or quality was improved. The said process did not result  

in  transformation  of  bitumen  into  a  new  product  having  a  

different  identity,  characteristic  and  use.   The  end  use  also  

remained  the  same,  namely  for  mixing  of  aggregates  for  

constructing the roads.

24. We also find substance in the contention urged on behalf of the  

assessee that the answer to the issue at hand stands concluded  

by  the  dismissal  of  the  Civil  Appeals  filed  by  the  revenue  

against the decision of the Tribunal in the case of Collector of   

Central Excise, Vadodara Vs. Tikitar Industries23. In that case  

the dispute was whether the process relating to improvement  

of  the  quality  of  bitumen  by  raising  its  softening  point  and  

penetration amounted to manufacture of  a  new and different  

commodity.  The process involved in improving the quality of  

bitumen  was  oxidation,  which  converted  straight  grade  

bitumen  into  air  blown  bitumen.   In  revenue’s  appeal  the  

Tribunal had inter-alia held  as under :

23 2000 (118) E.L.T. 468 (Tri.)

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“19. The duty paid bitumen received by the  Assessee is boiled so that foreign substances  like sand and stone settle down; thereafter  the  air  is  blown  into  the  material  for  improving  the  quality  of  the  bitumen  by  raising the softening point and penetration;  this makes the bitumen suitable for intended  application.   It  is  seen  from  the  process  undertaken  by the  Assessees  that  only  the  quality  of  the  product  which  has  already  suffered duty is improved…...”

             (Emphasis supplied by us)

As aforesaid, revenue’s appeal was dismissed by this Court vide  

order dated 2nd   August, 2006 in Tikatar Industries (supra).

25. We therefore, hold that PMB or CRMB cannot be treated as  

bituminous  mixtures  falling  under  CSH  27150090  and  shall  

continue  to  be  classified  under  CSH  27132000  pertaining  to  

tariff for petroleum bitumen.

26. In  view  of  the  opinion  expressed  above,  we  deem  it  

unnecessary to deal with the other grounds urged on behalf of  

both the sides.

27. For the foregoing reasons,  no ground is made out for our  

interference with the impugned orders passed by the Tribunal  

in  all  the  appeals  mentioned  in  paragraph  1  supra.   The  

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appeals, being bereft of any merit, are dismissed accordingly,  

with no order as to costs.

.……………………………………               (D.K. JAIN, J.)  

                             .…………………………………….  (ASOK KUMAR GANGULY, J.)

NEW DELHI; JANUARY 13, 2012.

RS

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