Full Judgment Text
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CASE NO.:
Appeal (civil) 2205 of 1999
PETITIONER:
THE COLLECTOR OF CENTRAL EXCISE, MEERUT
Vs.
RESPONDENT:
M/S. KAPRI INTERNATIONAL (P) LTD.
DATE OF JUDGMENT: 30/04/2002
BENCH:
N. Santosh Hegde & Shivaraj V. Patil
JUDGMENT:
SANTOSH HEGDE, J.
The Assistant Collector of Central Excise had made a demand
on the respondent for clandestine clearance of bed-sheets, bed spreads
etc. The said demand was confirmed by the Commissioner of Central
Excise along with the demand made for wrongful availment of
benefits under Notification dated 1.3.1983 for the period 1983-85 as
also the order of seizure of goods with an option to the respondent to
redeem the same, if it so desired, on payment of a redemption fine
with a further direction to pay a penalty of Rs.25 lacs. Against the said
order, the respondent preferred an appeal before the Customs, Excise
& Gold (Control) Appellate Tribunal (for short ’the tribunal’) which
by its order dated 3.8.1998 allowed the said appeal.
Being aggrieved by the said order, the Revenue has preferred
this appeal before us. Learned Attorney General appearing for the
appellant, contended that though the items, namely, bed-sheets, bed
spreads, table clothes, napkins etc. are manufactured by the
respondent by cutting cotton fabrics from running length through their
sister concern M/s. Dior International, the finished products were
totally new marketable commodities, having distinct market identity.
Therefore, even though the material, namely, the cotton fabrics had
earlier been subjected to duty in view of the fact that new products
after the process of manufacture had emerged, which are marketable
on their own identity as bed-sheets, bed spreads, table clothes, napkins
and pillows made of cotton fabrics, same are exigible to duty again.
He pointed out that though the tribunal specifically did not give a
finding as to the emergence of a new product from the running length
of cotton fabrics, it seems that the tribunal proceeded on the basis that
such a new product had emerged but the same was not exigible to
fresh duty because the cotton fabric from which the new product was
made, had already suffered duty under Tariff Item 19(I). Learned
Attorney General argued that this view of the tribunal that once the
raw-material suffers duty under a particular tariff item, any new
product emerging out of the process of manufacture from such
material cannot be made exigible to the levy of duty under the very
same tariff item, is erroneous and cannot be sustained.
We have perused the order of the original authority as well as
that of the tribunal. We have no doubt that by cutting the cotton
fabrics from running length into small pieces and giving them a
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definite required shape to form new articles like bed sheets, bed
spreads, table clothes etc., the respondent has produced a new
commodity which has a definite commercial identity in the market.
The pertinent question, therefore, is : whether such new article
is exigible to duty under Tariff Item 19(I) or not ? The tribunal has
held that since the raw-material has already suffered a duty under a
particular tariff item, namely, Tariff Item 19(I), the product
manufactured by such material, is not exigible to levy of duty. In our
opinion, this view of the tribunal is not correct. This Court in the case
of Laminated Packings (P) Ltd. v. Collector of C. Ex. (1990 [49] ELT
326 SC), in a similar situation, had held thus :
"The further contention urged on behalf of
the appellant that the goods belong to the
same entry is also not relevant because even
if the goods belong to the same entry, the
goods are different identifiable goods,
known as such in the market. If that is so,
the manufacture occurs and if manufacture
takes place, it is dutiable. ’Manufacture’ is
bringing into being goods as known in the
excise laws, that is to say, known in the
market having distinct, separate and
identifiable function. On this score, in our
opinion, there is sufficient evidence. If that
is the position, then the appellant was liable
to pay duty."
It is evident from the above that the mere fact that the material
from which the new goods are manufactured, has suffered a duty
under a particular tariff item that does not exclude the finished
product from being exigible to fresh duty if the Tariff Act provides for
it. In the instant case, though the cotton fabric had suffered duty under
Tariff Item 19(I), the Tariff Act has made bed sheets, pillow covers
etc. also dutiable under the very same tariff item, therefore, the
respondent is liable to pay duty on bed sheets, pillow covers, napkins
etc. manufactured by it.
For the reasons stated above, this appeal is allowed, the
impugned judgment/order of the tribunal is set aside and that of the
Commissioner restored.
.J.
(N. Santosh Hegde)
..J.
April 30, 2002. (Shivaraj V. Patil)