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1991 (56) E.L.T. 58 (Bom.)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.L. Pendse and A. V. Savant, JJ.
PRAKASH CONSTRUCTION AND ENGINEERING CO.
Versus
UNION OF INDIA
Writ Petition No. 359 of 1984, decided on 30-7-1991
Asphalt Mix - Process of preparation not amounting to manufacture and article not
“goods” liable to duty under Item 68 of erstwhile Central Excise Tariff. –
The Court is unable to accede to the conclusion that the process of preparation of asphalt
mix amounts to manufacture as contemplated by Section 2(f) of the Central Excises and Salt Act,
1944. Therefore the view of the Collector that the company is manufacturing goods falling under
Item 68 of the Central Excise Tariff cannot be upheld. In this context the impugned order is
entirely erroneous and is set aside. [para 3]
Manufacture - Process of preparation of asphalt mix not amounting to manufacture
- Section 2 (f) of Central Excises & Salt Act, 1944.
[para 5]
Precedent - Asphalt mix held by the Collector of Central Excise (Appeals) not liable
to duty - Not permissible for subsequent Collector to sit in Appeal over the order passed
by his predecessor.
[para 3]

REPRESENTED BY : Shri S. V. Vaidya with Shri A. N. Athawale, for the Petitioners.

Shri J. P. Deodhar with Shri A. S. Khan for the Respondents.

[Oral Judgment per : Pendse, J.]. – By this petition filed under Article 226 of the Constitution of India, the petitioners
are challenging the legality of order dated December 17, 1983 passed by Collector of Central Excise, Bombay-II, holding that
the petitioners are liable to pay excise duty in respect of manufacture of “Hot Mix Asphalt” and the duty leviable is Rs.
2,52,325.73 for manufacture of quantity valued at Rs. 45,82,706.80 between the period commencing from June 18, 1977 and
ending with September 24, 1979. The impugned order is unsustainable and only few facts are required to be stated to
appreciate the grievance of the petitioners.
2. The petitioners are a partnership firm carrying on business of road contractors. For the road construction activities,
the petitioners installed two Asphalt Mix Plants, one at Andheri and another at Turbhe. In the said asphalt plants, asphalt mix
is prepared and which is required for the purpose of construction of road. The asphalt mix is not sold in the market and is
merely used for captive consumption. The process of preparing asphalt mix is small stones along with bitumen are dried up
and heated to about 150° centigrade in the mixing box. The mixing box is constantly rotating so that the small stones are
coated with a fine paste of bitumen. This mixture is then directly released in a truck called dumper, which is taken on the road
site. The dumper then empties the asphalt mix in a paver on the road site which spreads the mix on the road in an even
manner like a carpet.
A show cause notice was issued to the petitioners to explain why action should not be taken for controvention of the
provisions of the Central Excise Rules. The gravaman of the charge was that the petitioners carried manufacturing work
without obtaining the requisite licences and failed to pay the excise duty in respect of manufacture of asphalt mix. The
petitioners appeared before the Authority and explained that the process of preparation of asphalt mix does not amount to
manufacture and it is so held by the Collector of Central Excise (Appeals) Bombay in the case of the petitioners by order dated
September 23, 1980. In spite of the previous order, the Collector of Central Excise proceeded to hold that the process
of............ and this order is under challenge.
3. Shri Vaidya, learned Counsel appearing on behalf of the petitioners, submitted that the impugned order is entirely
unsustainable and we are in agreement with this submission. Shri Vaidya invited our attention to the earlier order dated
September 23, 1980 passed by the Collector of Central Excise (Appeals) where it was held that the asphalt mix is not goods

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liable to excise duty. The impugned order recites that the earlier order is not correct. We fail to appreciate how it is
permissible for the subsequent Collector to sit in appeal over the order passed by his predecessor. Apart from this
consideration, we are unable to accede to the conclusion that the process of preparation of asphalt mix amounts to
manufacture as contemplated by Section 2(f) of the Central Excise Act. We have set out the process undertaken by the
petitioners and we are not prepared to uphold the view of the Collector that the Company is manufacturing goods falling under
Tariff Item No. 68 of Central Excise Tariff. In our judgment, the impugned order is entirely erroneous and is required to be set
aside.
4. Accordingly, rule is made absolute and the impugned order dated December 17, 1983 passed by the Collector,
Central Excise, Bombay-II and copy of which is annexed as Ex. ‘F’ to the petition is quashed. The petitioners are not liable to
pay excise duty in respect of process of preparation of asphalt mix. In the circumstances of the case, there will be no order as
to costs.
______

...
Judicial Analysis
for
Prakash Construction and Engg. Co. vs. Union of India
1991 (56) ELT 58 (Bom.)

This case was:

q Referred in 2004 (173) ELT 317 (Tribunal Bangalore)
q Referred in 2006 (206) ELT 1153 (Bombay High Court)
q Relied in 2013 (290) ELT 49 (Bombay High Court)
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