1986 (8) TMI 198 - AT - Central Excise

Summary

Issues Involved:
1. Whether the Collector of Central Excise (Appeals) committed an error in holding that the respondent is entitled to avail of the facility under Rule 56-B in respect of POY.
2. Whether POY is a 'semi-finished' or in the nature of semi-finished goods.
3. What is the true scope and ambit of Rule 56-B?

Issue-wise Detailed Analysis:

1. Whether the Collector of Central Excise (Appeals) committed an error in holding that the respondent is entitled to avail of the facility under Rule 56-B in respect of POY.
The Collector of Central Excise (Appeals) granted permission for the removal of POY from the respondent's factory for further orientation and texturisation, considering POY as semi-finished goods. However, the Assistant Collector rejected this application, holding that POY is excisable and finished goods. The Assistant Collector observed that POY is regularly sold and purchased in the market, thus not qualifying as semi-finished goods. The Collector (Appeals) disagreed, stating that POY requires further processing before it can be used in weaving or knitting fabrics, thus qualifying as semi-finished goods.

2. Whether POY is a 'semi-finished' or in the nature of semi-finished goods.
The Assistant Collector held that POY is a finished product, as it is sold in the market and excise duty is levied on it. The Collector (Appeals) countered that POY requires further processing (drawing and texturisation) before it can be used in fabric manufacturing, thus it is semi-finished. The Tribunal, however, concluded that POY is a finished product since it is identifiable, marketable, and excisable under Tariff Item 18 II (i) (a). The Tribunal emphasized that the end-use of POY is irrelevant in determining its status as finished or semi-finished goods.

3. What is the true scope and ambit of Rule 56-B?
Rule 56-B allows the removal of excisable goods in the nature of semi-finished goods for further manufacturing processes without payment of duty. The Tribunal clarified that this rule is intended for processes that complete a semi-finished product into a finished product, not for converting one excisable commodity into another. The Tribunal held that the manufacturing processes contemplated under Rule 56-B should be those required for the completion of the product, not for producing a new excisable commodity.

Conclusion:
The Tribunal concluded that the order of the Collector of Central Excise (Appeals) was erroneous. POY is not a semi-finished good requiring further manufacturing processes under Rule 56-B. The Tribunal emphasized that Rule 56-B does not authorize the removal of finished excisable goods for the manufacture of another excisable commodity. Consequently, the Tribunal allowed the appeal, set aside the order of the Collector (Appeals), and confirmed the order of the Assistant Collector.