1996 (7) TMI 144 - SC - Central Excise

Whether 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? Held that - 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. Appeal dismissed.

Summary

Issues: Challenge of excise duty on processed commercial plywood.

In this case, the appellant challenged an order passed by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) regarding the liability of excise duty on processed commercial plywood. The appellant argued that the duty was already paid for the plywood before processing and, therefore, the processed product should not attract excise duty. The appellant contended that the processing of commercial plywood by applying Phenol Formaldehyde Resin and wire mesh did not result in the emergence of a new product. The Assistant Collector of Central Excise issued a show cause notice stating that the slip-proof commercial plywood, after processing, was a different product and thus liable to duty under the relevant sub-heading of the Central Excise Tariff Act, 1985.

The Collector of Central Excise (Appeals) and CEGAT upheld the view that the processed commercial plywood was a new product and confirmed the duty liability. The appellant relied on previous proceedings where duty was refunded on similar products to support their argument. The appellant also referred to an advice from the Board of Central Excise in 1975, which was deemed irrelevant in the context of the 1985 tariff provisions. CEGAT considered various factors to determine whether the processing resulted in a new commercial product, including value addition and separate use. CEGAT concluded that the application of Phenol Formaldehyde Resin did indeed create a new commercial product.

The appellant's counsel argued that despite the processing, no real change occurred in the plywood, but the Tribunal found that the processed product acquired a different identity and was, therefore, a distinct commodity. The appellant attempted to rely on precedents, including a decision related to galvanised iron pipes and tubes, but those cases were deemed not applicable to the current situation. On the other hand, the respondent's counsel cited a case involving lamination of kraft paper with polyethylene, where the court held that lamination amounted to manufacturing a new commodity. The court found no merit in the appeal and dismissed it, agreeing with the fact-finding authority that the processed commercial plywood was indeed a different product attracting excise duty.