2017 (3) TMI 1000 - AT - Central Excise

Manufacture - process of manufacturing of laminated HDPE fabrics - whether the process of lamination of HDPE woven fabrics by LDPE amounts to manufacture and whether laminated HDPE woven fabrics is a new distinct product or otherwise? - Held that - Since the basic material I.A. HDPE fabrics is coated by LDPE, the description of the final product does not change is admitted fact i.e., laminated HDPE fabrics - In the case in hand there is no process which has been undertaken by the appellant which is incidental or ancillary to the completion of manufactured product as the HDP fabrics coated with LDPE remains laminated woven HDPE fabrics. The laminated HPDE fabrics that comes into existence due to the process of lamination cannot be held as a manufactured product attracting Central Excise duty - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the process of lamination of HDPE woven fabrics by LDPE amounts to manufacture and whether laminated HDPE woven fabrics is a new distinct product or not.

Analysis:

Issue 1: Process of Lamination and Manufacture
The case involved the question of whether the process of lamination of HDPE woven fabrics by LDPE amounts to manufacture. The appellant contended that the process did not change the raw material and, therefore, did not amount to manufacturing. The adjudicating authority disagreed and imposed duty demands and penalties. The Tribunal analyzed the process and found that the appellant had cleared laminated HDPE woven fabrics without discharging duty liability. The definition of manufacture under the Central Excise Act was considered, and it was noted that the process did not result in a change in the final product. The Tribunal referred to relevant case laws and concluded that the lamination process did not create a new product, thus not attracting Central Excise duty.

Issue 2: Distinct Product Creation
The second aspect was whether the laminated HDPE woven fabrics constituted a new distinct product. The appellant argued that since both HDPE fabrics and laminated HDPE fabrics fell under the same Tariff Heading number, the question of manufacturing did not arise. The respondent contended that the lamination process created a new product with distinct characteristics and uses. The Tribunal considered previous judgments and held that the lamination did not transform the product into a new commodity known to the market. Citing relevant Supreme Court decisions, the Tribunal ruled in favor of the appellant, stating that the lamination process did not amount to manufacturing a new product.

Conclusion:
The Tribunal held that the lamination of HDPE woven fabrics by LDPE did not amount to manufacturing a new product attracting Central Excise duty. The appeals were allowed on merits, and the confiscation of the laminated HDPE fabrics was set aside. The decision was based on the analysis of the lamination process, relevant legal definitions, and precedents set by the Supreme Court in similar cases.