2002 (9) TMI 104 - SC - Central Excise

Whether plastic body, a part of Electro Mosquito Repellant, and Fragrant Mat are chargeable to excise duty under Clause 5(f) of Notification 160/86-C.E. dated March 1, 1986 and Sub-Heading 3307.49, respectively, of the Central Excise Tariff Act, 1985? Held that - If one goes to the market to purchase plastic body of EMR of the respondents either for replacement or otherwise one cannot get it in the market because at present it is not a commercially known product. For these reasons, the plastic body, which is a part of the EMR of the respondents, is not goods so as to be liable to duty as parts of EMR under para 5(d) of the said exemption notification. As already mentioned that not merely Agarbatti and Dhoop but preparations which are akin to Agarbatti and Dhoop and which can produce vapour on burning and spread perfume would fall within the meaning of that entry. From the process of manufacture of Fragrant Mat, noted above, it cannot but be held that preparation in Mat form is similar to that of Agarbatti . Therefore, Fragrant Mats are classifiable under Sub-Heading 3307.41 and not under 3307.49 of the Tariff Act. Appeal dismissed.

Summary

Issues:
1. Whether plastic body and Fragrant Mat are chargeable to excise duty under specific clauses of the Central Excise Tariff Act, 1985.

Analysis:
1. The case revolved around the chargeability of excise duty on the plastic body of Electro Mosquito Repellant (EMR) and the Fragrant Mat under relevant clauses of the Central Excise Tariff Act, 1985. The High Court held that the plastic body is not considered 'goods' under the Tariff Act and therefore not liable to excise duty. Similarly, the Fragrant Mat was disputed for classification under Sub-Heading 3307.49, with the Revenue arguing against it being classified as 'Agarbatti' or 'Dhoop' under Sub-Heading 3307.41.

2. The plastic body issue was debated based on its marketability. The plastic body was manufactured specifically for the EMR and not traded in the market independently, leading to the argument that it lacks commercial identity and marketability. The Supreme Court referred to precedents emphasizing that marketability is a crucial factor for determining the liability to excise duty, and in this case, the plastic body did not meet the criteria for being considered 'goods' under the Tariff Act.

3. Regarding the Fragrant Mat classification, the Court analyzed the process of its preparation provided by the respondents. The preparation method indicated similarities to 'Agarbatti' and 'Dhoop', falling under Sub-Heading 3307.41. The Court concluded that the Fragrant Mat's manufacturing process aligned with the characteristics of 'Agarbatti', warranting its classification under Sub-Heading 3307.41 instead of 3307.49.

4. Ultimately, the Supreme Court dismissed the appeals, upholding the High Court's decision and finding no illegality in the orders under challenge. The judgment clarified the classification and liability to excise duty for the plastic body and Fragrant Mat, providing a detailed analysis based on the relevant clauses and precedents.