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Metal Forgings Private Limited, New Delhi v/s Union of India

    Letters Patent Appeal No. 4 of 1985

    Decided On, 12 August 1987

    At, High Court of Delhi


    For the Appearing Parties: R.K. Watel, Rajinder Dutt, Rajiv Nair, S.L. Vatel, Vipin Sanghi, Advocates.

Judgment Text


(1) THE main question for determination in this Letters Patent Appeal is whether the steel flanges manufactured by the appellants are classifiablefor payment of excise duty under tariff item No. 26aa (ia) or under item No. 68 of the First Schedule to the Central Excies and Salt Act, 1944 or both. Briefly, the relevant facts are as follows :-

(2) THE appellant company manufactures a number of steel products by forging process. The process of manufacture of their forged products consists of cutting of steel, pre-heating it, heating and beating of steel material till the final shape nearest to the shape desired by the customer and/or specifications is achieved. Thereafter, the extra/unwanted material is removed by cither trimling or by gas cutting or by skin cutting and/or by rough machining, to achieve the shape and section nearest to the forged steel product required by the customers. These shapes and sections' are subjected to further processes of polishing and drilling, to make them suitable and identifiable as parts of machinery. Mostly the products are sold after processes of machining, polishing and drilling are done but, sometimes, these are also sold without such processes, if desired by the customers. According to the appellants, the dispute in this a/peal is only with. regard to flanges and no other product The claim of the appellants is that flanges are classifiable for payment of excise duty only under tariff item 26aa (ia) and under no other tariff item. Tariff item 26aa reads as under : '26aa. : Iron or steel products are as follows, namely :-

(i) Semi-finished steel cutting blooms, ballots, slabs and sheet bars, tin bars and hoe bars.

(ia) bars, rods, coils wires, jonts (girders, angles other than slotted angles, channels other than slotted channels), tees, beaims, zeds, through piling and all other rolled, forged, extruded shapes and Sections, not otherwise specified:

(ii) plates and sheets (inoluding uncoated plates and sheets intended for tinning and forms, such as ridges, channels other than slotted channels, rain water pipes, and other 'fittings made from plates or sheets, but not including plates and sheets after tinning and hopps, all sorts other than skelp and strips ;

(iii) flats, skelp and strips;

(iv) pipes and tubes (including blanks thereof) all sorts whether rolled, forged, spun, cast, drawn, annealed, welded or extruded;

(v) All other steel castings not otherwise specified;

Explanation ' "skelp" means hot rolled narrow strip width not exceeding 600 mm with rolled (square slightly round or levelled) edge. '

(3) TARIFF item No. 26aa was inserted by Act No. 22 of 1962. However, in the year 1962, the sub-item number of present (ia) was (i). Tariff item No. 26aa (i) as extracted above, was not there in the year 1962. In the year 1963, by Act No. 13 of 1963, tariff item No. 26aa (i), as it now stands,. was inserted and original tariff item 26aa (i) was renumbered as (ia), and since then the position remains the same.

(4) WITH effect from 1st March, 1975, tariff item 68 was inserted in the First Schedule to the Act and it reads as 'under:- Tariff item 68

All other goods not elsewhere specified manufactured in a factor, but excluding alcohols, opium. . . :. . . . . . . . '

(5) SOON afterinsertion of item 68, disputes started. The question arose whether the flanges manufactured by the appellants were liable to be classified for payment of central excise duty under sub-item (ia) of item 26a. A of the Schedule or the said ranges also attracted the newly introduced tariff item 68. The appellant company received letter dated 24th June, 1975 from" the Superintendent, Central Excise , (MOR-IV) wherein it was stated that 'forged products which are machined and are ultimately. parts of machinery should be classified under tariff item 68 A reply was sent to the said letter, staling that the intended classification is unwarranted and that neither such forged products nor any other forged products can be classified under tariff item 68, the same being within the ambit of tariff item 26aa and/or 34-A. Thereafter, there was further correspondence between the parties on the question of applicability of tariff item 68. For the present purpose, it is not necessary to refer to the said correspondence and it will be sufficient to state that by the order dated 22nd January 1976, Shri K. D. Tyal, Assistant Collector of Central Excise, held that the flanges will be covered under tariff item 68 in addition to duty liability under tariff item 26aa (ia) at the initial forging stage,

(6) THE order of. Shri Tyal was upheld in appeal by Appellate Collector and by Government of India in the revision petition. While dismissing the revision petition, the Central Government adopted the reasoning given in order No. 176 of 1979 dated 3rd March, 1979 in the case of M/. s. Guest Keen. and Williams Limited. It was observed: Government observe that all rolled, formed or extruded shapes and sections, not otherwise specified are excisable under sub-item (ia) of Item 26aaofthe C. E. T. In other words, if the formed products are specified under other Tariff Items, namely, from Item I to Item 67, these alone would go outside the scope of sub-item (ia) of item 26aa. Pares of motor vehicles etc. , would come in this category. However if such products are not specifically covered under Items I to 67, these would necessarily be classifiable under sub-item (ia) of item 26aa. In respect of those forged shapes and sections which maybe subsequently used as components for machinery, classification has necessarily to be under sub-item (ia) of Item 26aa. If such products are. processed further to make them suitable and identifiable as parts of machinery, these products would attract duty again under Item 68 which was inserted in the C. E. T. , w. e. f. 1-3-1975. The result would be that at the forging stage, even products, which are intended to be used as components/parts of machinery other than those which fall under any of the item No. I to 67 of C. E. T. have necessarily to be paid duty under sub-item (ia) of Item 26aa. Thereafter, if other processors. which make them identifiable parts of machinery are undertaken, duty liability will further arise under Tariff ltem 68.

(7) THE aforesaid orders have been upheld by the learned single Judge. The learned single judge came to the conclusion that when the formed products are" maching they assume an altogether different character from what it was when forged; forged products which are machined, polished, holed, etc. , and made fit for being used as machine parts assunae a different name, character and use, and such products as same altogether. different character from what it was when forged and so as to make them identifiable or usable as machine parts. The learned single judge further held that the forged products which have undergone the further process of manufacture to make them suitable and identifiable as machine parts, leave the factory gate in a form known to the commercial community as 'machine parts' and they are required to pay duty under tariff item 68 in addition to the duty at the stage of forging.

(8) MR. S. L. Watel, learned counsel for the appellants, has contended that the flanges do not cease to be forged products of, iron and steel within the purview of Tariff Item 26aa (ia) merely because the same are machined by tooled and/or holes are drilled therein; these. Processes applied to flanges after they come out of furnace, to irlake them marketable, are only ancillary and do not change the character of the article that is manufactured by forging process. No transformation or change takes place by these processes and the products of the appellant company areliable to pay excise duty only under tariff item 26aa and not under tariff item 68, or both.

(9) BEFORE adverting to the aforesaid contentions of the learned counsel, it would be appropriate, at this juncture to state the well settled principle that primarily it is for the authorities of central excise to determine the header the entry in tariff schedule under which any particular commodity falls, but, if in so doing, these authorities adopt a construction, which no reasonable person could adopt, that is if the construction is perverse, then alone the court can exercise its writ jurisdiction and is competent to interfere. The court dealing with the petitions under Article 226 of the Constitution of India is not sirting in appeal over the decisions of the excise authorities. It is also well settled that if two constructions are possible, and the authorities ado pot one which is in favour of the revenue, the court has no jurisdication to interfere merely because the other interpretation favourable to petitioner appeals to the court as the better one to adopt: See Collector of Customs Vs, Ganga Shettv. AIR 1963 SC 1319 (1); Girdhari Lal Vs. Union of India, AIR 1964 SC 1949 (2), and V. V. Iyer Vs. Jagjit Singh, AIR 1973 SC 194 (3).

(10) LA the present case, the Assistant Collector of Central. Excise, Appellate Collector in appeal, and the Central Government in revision petition, have all come to the conclusion that the shapes and sections which are processed further to make' them suitable and identifiable as parts of machinery would attract duty again under item 68c The decision of these authorities have been upheld by the learned single judge. The court would be competent to interfere and quash these decisions only if the construction placed by these authorities is perverse. . Is this the position in this case is the question for deitemination'

(11) BEFORE answering the aforesaid question and dealing with the various contentions stated above, it maybe useful to reproduce in the words of the appellants, themslves what they had said in,respect to the same goods in their earlier Civil Writ Petition No. 1037 of 1974. In the said petition, the appellants stated: the products manufactured by the Petitioner Company are thus machinery parts or components or parts of machine tools for all intents and purposes and by all standards known to the trade, both manufacturers and customers. . . . . . . . . . . . The respondents have, however, failed to this day to explain to the petitioner company as to how they purport to classify the machinery parts components manufactured by the Petitioner Company as forged or extruded 'shapes and sections falling within sub-item (i) (a) of item 26aa of the Schedule of Central Excise and Salt Act, 1944.

(12) THE aforesaid writ petition filed on 27th August, 1974 was dismissed as withdrawn on 5th August, 1975. The aforesaid extracts have been taken, as stated above, from the averments made by the appellants in various paragraphs' of their earlier writ petition, not for applying the principles of estoppel against the appellant but to extricate the correct facts as understood by the appellants themselves who are new describing the approach of the authorities under the Central Excise Act inholding that the flanges are classifiable for payment of' excise duty under tariff item 68 as machine parts, as perverse.

(13) WITH the aforesaid background, now, let me take up the various contentions raised by Mr. Watel. There is no difficulty in accepting the contention of the learned counsel that tariff hem 68 is a residuary item, in the sense that the said tariff item 68 would be attracted only if any goods do not fall under tariff items I to 67. It has also been so held by the learned single Judge. To the said construction no objection has been taken by the counsel for the respondents, and even- other vise that is the only reasonable construction to be placed on tariff item 68. The principal question is whether the products of the appellant company fall under any other tariff item Nos. I to 67. It is not the case of any of the parties before us that the flanges fall under any tariff item- other than tariff item 26aa (ia) or 68. The applicability of any other tariff item is, therefore, eliminated for the purposes of decision of tins appeal. The case of the appellants is that flanges fall only under tariff item 26aa (ia), on the other hand, the ease of the respondents, is that flanges areliable to be classified as gorged shapes and sections' under item No. 26aa (ia) before the process of machining, polishing and drilling and after these se processes are undertaken, the flanges cease to be forged 'shapes and sections and become identifiable parts of machinery liable to be again classified under item 68, in addition to classification under Item 26aa (ia).

(14) THE contention of Mr. Watel is that flanges even after processes of machining, polishing and drilling remain the forged steel products and, therefor item 26aa (ia) is applicable. The significant words in this tariff item aye "all other rolled forged extruded shapes and sections not otherwise specified (emphasis added). The requirements for the applicability of this item thus are that the products should be shapes add sections. Such shape and section should be rolled forged extruded and should not be specified elsewhere in the Schedule. In case, rolled, forged extruded shape and section is specified elsewhere this tariff item would not be applicable. The wordings in this tariff item are not forged products. The wordings are formed shares and sections. The question, therefore, is not whether flanges even after process of machining, polishing and drilling are undertaken remain the forged steel products' contended by the appellants, The real question is whether flanges remain forged shapes and sections even after these processes or they are transformed into parts' of machinery. In other words, the question to be determined is whether machine parts are manufactured or not on account of these further, processes on forged shapes ,and sections,

(15) SECTION 2 (f) contains a definition of the expression 'manufacture' to include 'any process incidental or ancillary to the completion of the manufactured product". But actually, this section does not define the expression 'manufacture" but only lays down an inclusive definition. Therefore, the word 'manufacture for the purposes of central excise has to be constructed in its natural and plain meaning but it shall also include any process incidental or ancillary to the completion of a manufactured product. It is not necessary to refer to all judgments on the said subject relied upon by the learned counsel except to refer to the three judgments of Supreme Court as the matter is, by now, well settled. In Delhi Cloth Mills Vs. Union of India AIR 1963 SC 791 (4), the Supreme Court has accepted the meaning of word 'manufacture' given in permanent edition of words and phrases, Volume 26, from an American judgment as follows : Manufacturer implies a change, but every change is not manufacture and yet every change in an article is a result of treatment, labour and manipulation. . But something more is necessary. There must be a transformation. A new and different article must emerge having a distinctive name, character or use.

(16) AGAIN, in South Bihar Sugar Mills Limited and another Vs. Union of India and others, AIR 1968 SC 922 (5), the Supreme Court held that manufacture which is liable to excise duty must bring into existence which is liable substance known to the market and that to become goods an article must be something which can ordinarily come to the market to be bought and sold and further that mere process is not manufacture. Again, in Allenberry Engineering Private Limited Vs. Ramakrishna Dalmia and Ors. , (1973) 2scr 257 (6), the Supreme Court reiterated that the word. 'manufacture' according to its dictionary meaning is the making of articles or material (now on large scale) by physical labour or mechanical power. In this case, again, a reference was made to the definition of 'manufacture according to Permanent Edition of Words and Phrases, Volume 26. The judgment of South Bihar Sugar Mills was cited in Allenberry's case (supra) with approval. There can be no dispute with above propositions but the real dispute is about its applicability.

(17) WHETHER transformation has taken place or not and 'whether a new and different article, having distinct name, character or use, has emerged or not is essentially a question of fact depending upon the facts and circumstances of each case. Whether execution of a particular kind of work, resuits in manufacture of a new and distinct article would also depend upon number of tests, some of them being: (i)'the nature of work carried out, (ii) whether the material undergoes alteration or change in its essential nature and character; (iii) whether anything more is required to be done to the said article or the same is marketable without any further process. It will differ from product to product. There can be no hard and fast rules. The nature and extent of processing may vary from one case to another. In a given case, even a small change may lead to a new article having distinct name, character and use being made. In yet another case it may not be so. To become a new commercial article, the product must cease to be the goods of the taxable description and become that of a different taxable description.

(18) MR. Watel vehemently contended that no transformation takes place by the process of machining, polishing and drilling boles as according to the learned counsel these processes are only incidental and ancillary to the completion of the manufactured product.

(19) LEARNED counsel laid great stress on a case decided by Patna High Court in re : Tata Yudyog Limited Vs. Assistant Collector of Excise, 1983 Excise Law Times 17 (Patna) (7). In the said case, the judgment proceeded on uncontroverted facts. as set out by the petitioners therein that the goods which they cleared to different customers as castings underwent further machining as well as processing like grove cutting, giinding combing etc. at the customers' and before they could be put into use inasmuch as certificates given by different customers to this effect and annexed with that petition had remained unrebutted by the department. It was, thus, a clear case where it was shown that the goods as cleared by the party therein require substantial machining and processing of different natures by the customers before being used as machine parts, whereas in the present case, there is no such suggestion even that the customers have to subject the goods to any further process before fixing them on machines and it can, therefore, be inferred that the goods do not require any further processing at the end of the customers and straightaway are identifiable as machine parts.

(20) THE learned counsel also referred to the judgment of the Supreme Court in Deputy Commissioner, Sales Tax (Law), Board of Revenue (Taxes), Ernakulam Vs. Pio Food Packers, 1980 E. L. T. 343 (S. C.) (8). In that case, all that was held was that where pineapple fruit was processed into the pineapple slices for the purposes of being sold in sealed cans, there is no consumption ot the original pineapple food for the purpose of manufacture though there may be some processing and the commodity continues to possess its original identity. In Chowgule and Co. Pvt. Ltd. and another Vs. Union of India and others, (1981) I S. C. C. 65 (9), it was held that the blending of different qualities of ore processing different chemical and physical composition so as to produce ore of the contractual specifications cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new and distinct commodity from the ore of different specification blendede together. What is produced as a result of blending is commercially the same article, namely, ore, though with different specifications than the ore which is biended and hence it cannot be said that any process of manufacture is involved in blendnig of ore. It is on the same reasoning that in P. C. Cheriyan Vs. Mst Barfi Devi, 1979 E. L. T. (593) (10),it was held that retreading of tyres does not amount to manufacture because it still remains a tyre and does not become a different article or a different identity.

(21) IT will be seen that in all these cases which have been strongly relied upon by the learned counsel for the appellants, there is no change in the original commdity from its original identity. Thus, even processing of pineapple fruit and canning them it still retains its original identity of pineapple fruit (Pio food case. Supra), even after blending of ores. 'it still remains ores (Chowgule's case supra) the retreaded tyres still remains tyres (Cheriyan's case supra). Thus, in all these cases, a new article never came into existence, and that is why. it was held that it is not a manufacture.

(22) THE test running through all the case law that was applied was, the processing of original commodity brings into existence a commercially different and distinctive commodity. In Cherian's case, reference was made to Federal Commissioner of Taxation Vs. Jack Zinader Property Ltd. , (1948-49) 78 C. L. R. 336 (11), where the question was whether the company which received old fur garments, like old worn out fur coats from its customers and remodelled them into modem style of coat or a fur necklace is remoddled into a style was engaged in the manufacture of goods. The majority quoted that the definition of manufacture' included whereby an artier or substance is formed which is commercially distinctive from those parts and in that view held that when company took skins made up into one description of fur garments, and produced another, it must be treated as having been made a different article and it must follow that, thus, goods were manufactured.

(23) SIMILARLY, in Dunlop India Ltd. and Madras Rubber Factory Ltd. , Vs. Union of India and others, 1983 E. L. T. 1966 (SC) (12), a judgment strongly relied upon by the learned counsel for the appellants, the Supreme-Court reiterated that the meaning given to articles in a fiscal statute must be as people in trade and commerce conversant with the subject generally treat and understand them inusual course. It was held that technical and scientific tests offer guidance only within limits and once the articles are incirculation and. come to be described and known in. common parlance, then, there, is no difficulty for statutory classification under a particular entry. Because of the voluminous evidence in that case, the Supreme Court on facts, came to. the conclusion that V. P. Latex was a component of SBR which is admittedly classified under rubber raw. The Supreme Court in this case was of the view that in the state of evidence before the revisional authority, no reasonable person could come to the conclusion that V. P. Latex would not come under rubber raw. This judgment again affords no assistance to the appellants inasmuch as 'it is clear, in the present case, that the goods which are being cleared are treated as machinery parts by the people in trade. In other words, the goods in question in commercial parlance are machinery parts and not forged shapes and sections.

(24) REFERENCE may also be made to the case Commissioner of Sales Tax, U. P. , Lucknow Vs. Harbilasrar and Sons, (1968) 21 S. T. C. 17 (13). In that case, the Supreme Court held that the word 'manufacture' has various shades of meaning and in the context of sales tax legislation if the goods to which some labour is applied remain essentially the same commercial article, it ' cannot be said that the final product is the result of manufacture. The assessee in that case was a-dealer in Pig bristles. Pig bristles are plucked by Kanjars from pigs and they bring them for sale to the asscssees. They then boil them and wash with soap and other chemicals and sort. them out according to the colours and sizes and tie them in separate bundles of different sizes and despatch them to foreign countries for sale. It was held that the bristles were not manufactured goods within explanation (ii) to section 2 (h) of U. P. Sales Tax Act 1948. It was further held that no new articles were produced by the assessees. The articales they bought are known as bristles both in the form in which these are bought from kanjars and the form in which they are sold in London.

(25) HOWEVER, in the present case, the position is altogether different. The goods which emerge after machining, polishmg and drilling holes assume new and distinctive forms. Forged shape and section as envisaged by tariff item 26aa (ia) is only the raw material from which the new commodity, namely, machine partis made. In this view of the matter,this judgment also does not support the view propounded by learned counsel for the appellants. Same is the position of the case The Union Carbide India Ltd. Vs. Union of India and others, AIR 1986 SC 1097 (14), and M/s. Sterling Goods Vs. State of Karnataka and another, AIR 1986 SC 1809 (15). The case of Union Carbide India Limited was dealing with an entry in the First Schedule to the Central Excise and Salt Act, whereas the case of M/s. Sterling Foods, was under the Central Sales Tax Act. In both these cases, commercial parlance test was applied and the Supreme Court came to the conclusion that there was no change of identity in the commercial parlance. In this case, the test laid down in Delhi Cloth Mill's case and Pio Food Packers case was reiterated. It was said that the test is whether in the eyes of those dealing in the commodity or in commercial parlance, the processed commodity is regarded as distinct in character and identity from the original commodity.

(26) MR. Watel apart from relying upon the Supreme Court judgments referred to above, also, laid great stress on a single Bench decision of Calcutta High Court in Gonterman Peipers (India) Limited Vs. Additional Secretary to the Government of India, 1986 (26) E. L. T. 471 (Cal.) (16) where it was held that cast iron and cast steel rolls were classifiable under items 25 and 26aa respectively of the Excise Tariff and that machining and polishing of these products would not make them liable to pay duty again under item 68. The said judgment, however, has no applicability as the facts therein were entirely different. In that case, the Calcutta High Court came to the conclusion on facts that castings at that stage are generally not-saleable in the market and to make them saleable finishing polishing work has to be undergone. Same was the position of cast steel rolls. However, the finding was that the customers had to convert the said castings into machine parts as per their own requirement by employing machining/turning/processing like groove cutting and grinding etc. The castings were held, at that stage, not to be finished castings. The products, it was held by the learned judge of the Calcutta High Court, are never known, dealt with or regarded in the market as finished machine parts and for making machine parts out of the said cast iron rolls and cast steel rolls manufactured at the cleared from the factory of the petitioner there in, the customers concerned had to undertake various processes such as groove cutting, grinding, combering etc.

(27) IN Coromandal Prodorite Pvt. Ltd. Vs. Govt. of India and others, on the facts and circumstances of that case, the Madras High Court came to the conclusion that as there was no manufacture, the end product is not excisable for levy of excise duty.

(28) ALL the cases relied upon by Mr. Wate she that it was on the peculiar facts and circumstances or the respective cases before the court that they came to the conclusion that there was no transformation and no new and different article having distinct name, character and use, came into being.

(29) IN the present case, the factual petition is altogether different Flanges cannot be properly called shares and sections. There is 'no substance in the contention that because flanges are shapes and sections at initial stage of forging they always retain so even after processes of machining, polishing and drilling are undertaken. Flanges are forged shapes and section before at oresaid processes and after these processes become merchandise of a very different kind, namely, machinery part. The essence of manufacture is that what is made shall be a different article from that cut of which it is made. Flanges are made out of forged shapes and sections. Both are different articles It is also clear that to flanges nothing more is required to be done at the customers and they are straightaway identifiable as machinery parts. They are known and are regarded in the market us finished machine parts. The appellants want us to hold that these machine parts are not machine parts, but are forged shapes and sections. Forged shapes and sections are only the raw material for these machine parts. If the contention of the appellants was to be accepted, then every item, however, small it may be and whatever process it may undergo, would remain a forged shape and section-although in the market it is known, sold and regarded as machine parts. It is not possible to agree with this general and wide proposition put forth by the learned counsel for the appellants, -the argument of the appellant is against the commercial parlance test. The people in trade would never think of flages as shapes and section, but would take it as parts of machinery. Flanges cannot be properly called shapes and sections' for the same reason for which agricultural Implements cannot be so called (See State of Mysore vs. Union of India AIR 1968 Mysore 37 (18). The Supre Court has affirmed the view of the Mysore High Court (See : Union of India Vs. State of Mysore, AIR ,1977 SC 127) (19). As ranges are not shapes and sections, tariff item 26aa (ia) would not be attracted after ranges are manufactured from forged shapes and actions. "

(30) FOR interpreting iterr. 26aa (ia), the principles ejusdem generis can also applied. Accordingly, unspecified goods, can come within the purview of this item only when such goods are of the same class as specified ones (See,: Mysore case supra). However, counsel for the appellants urged that die principles of ejusdem genesis have no appllents and reliance was placed on three judgments of the Supreme Court repelled in Tribhuvan Prakash v. Union of India,' AIR 1970 SC 540 (20), Amar Chandra Chakraborty v. Collector of Excise, AIR 1972. SC 1863 (21), and Mangalore Electric Supply Company Limited v. Commissioner of Income Tax. West Bengal, Calcutta, AIR 1978 SC 1972 (22), for the proposition that to invoke the application of ejusdem generis rule, there must be a distinct genus or category and that the specific words must apply not to different objects of widely different character. but to something which can be called a class or kind of the objects. Where this is lacking, the rule cannot aprly. The contention is that in tariff atriff item 26aa (ia), there is no distinct genus or category in the specific words preceding the general words, namely, rolled, forged, or extruded shapes and sections. There is no substance in the contention. A bare reading of tariff item 26aa (ia)

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would show that specific word's, namely, bars, rods, coils etc. , all belong to one genus. All the words constitute a class or category by themselves, and there is no indication of a different legislative intent. It will be seen that all the specific items mentioned in sub item (ia) of item 26aa relate to items or goods which can be used for manufacturing or producing some other goods and it is rarely that the said goods are used by themselves. As stated above, the words 'shapes and sections' are very significant. If sub-item (,ia) was to apply to all rolled, forged or extruded goods or products, the legislature would have used the words 'goods or products' instead of shapes and sections'. The words 'shapes and sections' gives a key to the problem. It could never be intended that every machine part would be "shape' and 'section', particularly when it is not so known in the market. The argument of the learned counsel for the appellants would be against the test of marketability or common parlance test. (31) THERE is also no substance in the plea of hostile discrimination. No basis was laid in the petition for such a pica. The averments, in this regard, in the writ petition are very vague. It hss not been stated that what goods are being manufactured by other person. Whether a particular product falls in one tariff item or the other depends upon the facts of each case. The plea of discrimination is misconceived. (32) FOR the reasons stated above, I hold that in the facts and circumstances of the case the process of machining, polishing and; or drilling holes on the forged shapes make them as identifiable pans of machines having different name character and use. Merel by because the forged shapes and sections are used subsequently for the manufacture of another article, namely, machine parts, it does not mean that the earlier process of manufacture was not complete hold that after removal of superflous extra skinof orgongs the goods in question are subjected to sophisticated machining and drilling for the specific purposes of manufacturing machine parts. After the aforesaid process, the ranges, cease to be shapes and sections and by these process transformation or substantial change takes place and shapes and sections go out of the preview of tariff item 26aa (ia). All the authorities of Central Excise have rightly come to the conclusion that. the goods in question are identifiable as machine parts. It is not possible to hold that the conclusion of the authorities is perverse. The forged products which undergo the further process like machining polishing and drilling holes to make them identifiable as machine parts leave the factory gate in a form known to the commercial community as machinery parts. (33) THE learned single Judge rightly held that the transformation takes place by further process of manufacture and as such the appellants are liable to pay duty of contral excise under tariff item 68 in addition to duty under item 26aa (ia) at the stage of forging. The counsel for the appellant, however, stated that centra! excise duty is not payable under tariff item 26aa (ia) on account of exemption notification issued by Government of India from time to time. This is for the respondents to decide in accordance with law. We are not concerned with this question in this appeal. For the reasons stated above, I would dismiss the appeal. However, in the facts and circumstances of the case, the parties are left to bear their own costs.