1986 (2) TMI 75 - AT - Central Excise

Summary

Issues Involved:
1. Classification of laminated and bituminized paper u/s Tariff Item 17 CET.
2. Determination of whether the lamination and bituminization processes constitute "manufacture" u/s Central Excises and Salt Act.
3. Applicability of exemption notifications and bar of limitation in the demand.

Summary:

Issue 1: Classification of Laminated and Bituminized Paper u/s Tariff Item 17 CET
The product manufactured by M/s. Guardian Plasticote Ltd. consists of two layers of kraft paper joined by a layer of polythene, whereas M/s. United Paper Products manufactures bituminized laminated paper. The contention was whether these products fell under Tariff Item 17 CET. The Tribunal held that the products are distinct commercial commodities and thus fall under the tariff description "Paper, all sorts."

Issue 2: Determination of Manufacture
The Tribunal referenced the Supreme Court's decision in Empire Industries v. Union of India, which held that any process resulting in a new commodity with a distinctive name, character, and use constitutes "manufacture." The Tribunal concluded that the lamination and bituminization processes result in new and distinct commodities, thus qualifying as manufacture u/s Central Excises and Salt Act.

Issue 3: Applicability of Exemption Notifications and Bar of Limitation
For M/s. United Paper Products, the Tribunal agreed with the lower authorities that Notification No. 67/76 should be applied first for set-off of duty, followed by slab exemption under Notification No. 45/73. Regarding the bar of limitation, the Tribunal upheld the demand under Rule 9, citing non-disclosure of bituminized kraft paper in the classification list as suppression of facts.

Separate Judgments:
1. Majority Judgment: The majority held that both laminated and bituminized paper are excisable as new products under Tariff Item 17 CET, and the processes involved constitute manufacture. The appeals were dismissed.
2. Minority Judgment by H.R. Syiem: Syiem argued against double taxation, stating that once duty is paid on a product, it should not be levied again even if the product undergoes changes. He emphasized that the tariff item should determine manufacture for excise purposes.
3. Separate Opinion by S.D. Jha: Jha concurred with Syiem, emphasizing that the Supreme Court's decision in Empire Industries should be read in context and not applied broadly to all tariff items. He argued that the absence of specific amendments for other items in the tariff should maintain the conservative understanding of excise duty. He would allow the appeal for M/s. United Paper Products based on High Court decisions.

Conclusion:
The majority decision dismissed the appeals, holding that the products in question are excisable under Tariff Item 17 CET, and the processes involved constitute manufacture under the Central Excises and Salt Act.