1984 (3) TMI 397 - AT - Central Excise

Summary

Issues Involved:
1. Classification of tubular shaped arc chamber housings under Tariff Item 22F(4) or Item 68 of the Central Excise Tariff.
2. Interpretation of "manufactures therefrom" in Tariff Item 22F.
3. Double taxation concerns.
4. Limitation period for demanding differential duty.

Issue-wise Detailed Analysis:

1. Classification of Tubular Shaped Arc Chamber Housings:
The appellants contended that their products, manufactured from glass fabrics, should be classified under Item 68, while the Department argued for Item 22F(4). The Tribunal concluded that the subject housings rightly fall under Item 22F(4) because the entry covers all manufactures made from glass fibres/yarn, even if the raw material undergoes intermediate processes such as weaving into fabrics.

2. Interpretation of "Manufactures Therefrom":
The appellants argued that "manufactures therefrom" in Item 22F should be restricted to products made directly from mineral fibres and yarn. The Tribunal rejected this interpretation, stating that the term "manufactures therefrom" is broad and includes products made from intermediate stages like glass fabrics. The Tribunal illustrated this by comparing it to everyday examples, such as bread made from wheat flour and shirts made from cotton cloth, which still retain their primary material identity despite intermediate processes.

3. Double Taxation Concerns:
The appellants argued against double taxation, claiming that since their starting material (glass fabrics) had already been taxed, the final product (the housing) should not be taxed again under the same entry. The Tribunal dismissed this argument, citing the Andhra Pradesh High Court judgment in M/s. Standard Packagings, which held that there is no inherent invalidity in double taxation if the legislature chooses to levy it. The Tribunal emphasized that the entry 22F(4) is a group entry covering various products, and multi-stage taxation is permissible. The Tribunal also noted that proforma credit facilities mitigate the effect of repeated taxation.

4. Limitation Period for Demanding Differential Duty:
The appellants contended that the demand for duty from June 1979 was time-barred. The Tribunal agreed, noting that the review show cause notice issued on 7/12-10-81 did not specifically demand duty for the past period, and the Collector's order could only demand duty for six months prior to the notice. The Tribunal held that the differential duty is payable only from 12-10-81 onwards, the date of the review show cause notice, and not from June 1979.

Conclusion:
The Tribunal upheld the classification of the subject goods under Item 22F(4) but restricted the demand for differential duty to the period from 12-10-81 onwards. The appeal was disposed of accordingly.