Full Judgment Text
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PETITIONER:
DECORATIVE LIMINATES (INDIA) PVT. LTD.
Vs.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE, BANGALORE.
DATE OF JUDGMENT: 31/07/1996
BENCH:
THOMAS K.T. (J)
BENCH:
THOMAS K.T. (J)
BHARUCHA S.P. (J)
CITATION:
JT 1996 (7) 627 1996 SCALE (5)582
ACT:
HEADNOTE:
JUDGMENT:
J U D G M E N T
THOMAS, J.
This appeal is in challenge of an order passed by the
Customs, Excise and Gold (Control) Appellate tribunal
(CEGAT) repelling the contention of the appellant that the
commodity commercial plywood processed by the appellant is
not liable to excise duty as the duty was paid for the
plywood before its processing.
The case of the appellant - company is the following.
Appellant is engaged in processing commercial plywood by
applying Phenol Formaldehyde Resin under 100 per cent heat
and pressure and costs the plywood with wire mesh, either on
one side or on both sides so as to make it slip proof
commercial plywood. The product is mostly used in body
building of vehicles or for flooring etc. On 3.9.1986, the
assistant Collector of Central Excise issued show cause
notice to the appellant company, in which it was stated that
since non-slip plywood is a different products it is liable
to duty as falling under sub-heading 44008-90 (Chapter 44 of
the Schedule to the Central Excise Tariff Act, 1985).
Appellant in the reply he explained that commercial plywood
was once subjected to duty and hence cannot again be made
dutiable merely on the strength of the processing done by
the appellant. The processed commodity does not become a
different product not the processing exercise a manufacture
according to the appellant. Some earlier proceedings, which
culminated in refunding the duty collected on such products
when the department latter realised that no duty was
chargeable on such commodity, have also been relied on by
the appellant to bolster up its stand.
The Assistant Collector took the view that the slip-
proof commercial plywood (made after carrying out the
processing work) is a different products and so is liable to
duty under the relevant subheading of the Schedule to the
Act.
Collector of Central Excise (Appeals) confirmed the
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said order of the said order of the Assistant Collector -
CEGAT by the impugned order has concurred with the said
finding and dismissed the appeal filed by the appellant.
Learned counsel for the appellant first contended that
since the department took a view in the earlier proceeding
(which culminated in the order passed in 1985) that no new
product was emerging from the processing done by the
appellant the same benefit has to be afforded to the
appellant now also. We are not disposed to decide the
question merely on the strength of the stand which Assistant
Collector had adopted prior to 1985. Then counsel invited
our attention to the advice tendered by the Board of Central
Excise in 1975 that "Duty should be charged at the plywood
stage as commercial plywood and subsequent alterations etc.
should be ignored" (vide CBE & C Bulletin for January -
March, 1975). Such an advice is irrelevant in dealing with
the tariff prescribed in 1985.
CEGAT has considered the factual position whether the
process of applying Phenol Formaldehyde Resin on plywood is
only nominal process which does not affect the identity of
the commodity or whether it is a substantial process
resulting in the emergence of a new commercial product.
According to the CEGAT, answer to the question whether any
particular processing would result in the emergence of a new
commercial products depends on various factors like- to what
extent the value is added, whether the product is prepared
for a separated use. In the case of non-slip plywood, after
coating it with Phenol Formaldehyde Resin and pressing it
with enroller, the department took the view before the CEGAT
that it becomes a new product. CEGAT accepted the aforesaid
stand of the department and found that application of Phenol
Formaldehyde Resin results in the emergence of a new
commercial products.
Learned counsel for the appellant contended before use
that no real change taken place on the plywood despite
subjecting the article to heat and pressure to apply the
Resin and coating it with wire mesh. But in the light of the
finding of the Tribunal that the plywood which appellant
purchased has turned into a new commercial products
acquiring a different identity there is no scope for
contending that the end product is not a different
commodity.
Learned counsel for the appellant tried to seek support
from the decision of this Court in Gujarat Steel Tubes Ltd.
and anr. Vs. State of Kerala and ors., 1989 (3) SCC 127. In
the sales tax proceedings taken against the petitioners in
the case it was contended that galvanized iron pipes and
types are a commercially different commodity from steel
tubes. This Court pointed out that the purpose of
Galvanizing the steel pipe is merely to make it weather-
proof.
Nor does the decision in Collector of Customs & Central
Excise and Anr. vs. Oriental Timber Industries, 1985 (3) SCC
85, cited before us by the learned counsel afford any useful
support to the appellant’s contention. The question
considered therein was the stage at which the plywood used
for manufacturing plywood "circles" became liable to excise
duty. In Collector of Central Excise Bombay vs. Popular
Cotton Covering Works, 1994 (73) ELT 264, the contention
raised by the assessee was that the works done by him for
winding cotton or fibre-yarn on the electric wire does not
amount to manufacture of a new product. the contention was
upheld by this Court on the basis of the finding arrived at
by CEGAT that no new commercially recognised article
district from electric wire was come into existence. It was
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pointed out in the decision that the excise authorities did
not lead any evidence to establish that winding cotton or
fibre class yarn upon electric wire would bring about a new
commercially recognised article. Those decisions, therefore,
do not help the petitioner.
Shri Joseph Vallappally, learned senior counsel who
argued for the respondent, cited the decision of this Court
in Laminated Packings (P) Ltd. vs. Collector of Central
Excise, 1990 (49) ELT 326, and submitted that the ratio
therein has a fare greater bearing on the issue involved in
the case. The question with polyethylene would amount to
manufacture. The Collector (Appeals) had taken the view the
lamination process on duty paid kraft paper would not invite
duty again. But this Court held that lamination amounts to
manufacture as it involves a process for bringing into
existence a different commodity distinct from kraft paper.
Sabyasachi Mukherji, CJ, has observed in that decision that
"laminated Kraft paper is distinct, separate and different
commodity know in the market as such from the Kraft paper".
There Lordships did not agree with the contention of the
counsel that since duty was paid on kraft paper and since no
change in the essential character or use of the paper had
been brought to the commodity it cannot be subjected to duty
once again. We agree with the learned counsel that the
position in this case is not very different from the above
case . The fact finding authority has correctly concluded
that the end product is distinctly different from what it
was before the processing was done on it.
We find no merit in the appeal, and accordingly we
dismiss it. No costs.