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Issues:
1. Whether the pasting of rubber solution on cotton fabric by a footwear manufacturing company amounts to the manufacture of rubberized cotton fabric, subject to excise duty. 2. Whether the process of manufacturing shoes from the pasted fabric is one continuous process or involves the separate production of rubberized cotton fabric. 3. Whether the unvulcanized D.I. Cloth used by the footwear company for making 'uppers' falls under Tariff Item No. 19-I(b) and is subject to excise duty. 4. Whether the 'uppers' produced by the company are marketable goods or merely process inputs for the manufacture of shoes. Analysis: 1. The petitioner, a footwear manufacturing company, argued that pasting rubber solution on cotton fabric is part of the continuous process of shoe manufacturing, not the production of rubberized cotton fabric. The Excise Department contended that the pasted fabric constitutes rubberized cotton fabric, a separate excisable item. The Assistant Collector's letter requested details of the manufactured goods. The petitioner emphasized the temporary nature of the pasted fabric's properties and the necessity of immediate use in shoe production. 2. The respondents asserted that the unvulcanized D.I. Cloth used for 'uppers' falls under Tariff Item No. 19-I(b) and is subject to excise duty. They argued that the process of rubberizing is integral to the manufacture of canvas shoes. The affidavit highlighted the technology advancements enabling vulcanization at the final stage and the quality enhancement through the process. 3. The petitioner contended that the 'uppers' are not marketable goods but process inputs due to their immediate usability and adhesive properties. They argued that the entire process, from pasting fabric to shoe manufacture, is continuous. The court noted the need for factual examination by the respondents to determine the marketability of the 'uppers' and the applicability of excise duty. 4. Referring to a Supreme Court judgment on marketability for excise duty, the court emphasized the importance of factual findings in determining the liability for excise duty. The judgment highlighted the necessity for the Department to establish whether the 'uppers' are sold in the market and if they qualify as distinct excisable goods. The court directed the respondents to address the issues based on facts and law, leaving the questions open for further examination. In conclusion, the writ petition was dismissed, allowing the petitioners to pursue the issues before the respondents. The court emphasized the need for factual assessments by the Department to determine the liability for excise duty, based on the marketability of the 'uppers' produced by the footwear company.
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