1986 (10) TMI 144 - AT - Central Excise

Summary

Issues Involved:
1. Classification of "stencil skin" for Central Excise duty.
2. Whether "stencil skin" qualifies as "goods."
3. Appropriate Tariff Item under which "stencil skin" should be classified (Item 17(2) or Item 68).

Detailed Analysis:

1. Classification of "Stencil Skin" for Central Excise Duty:
The appellants manufacture various stationery items, including stencil paper, which involves converting tissue paper into "stencil skin." Initially, the stencil paper was cleared under Item 68 of the Central Excise Tariff. However, the authorities later demanded reclassification under Item 17(2) and issued a demand-cum-show cause notice for differential duty. The Assistant Collector and the Collector of Central Excise (Appeals) upheld this reclassification, leading to the present appeal.

2. Whether "Stencil Skin" Qualifies as "Goods":
The appellants argued that "stencil skin" is not "goods" as it is not bought or sold in the market and is used only for captive consumption. They cited the Supreme Court's judgment in Union Carbide India Ltd., which held that to attract excise duty, an article must be capable of being sold. The appellants also referred to a Board's Tariff Advice stating that intermediate products not coming to the market should not be considered excisable. The Revenue countered this by arguing that "stencil skin" is a complete product and is capable of being sold, as evidenced by its export instances.

3. Appropriate Tariff Item Under Which "Stencil Skin" Should Be Classified:
The Revenue argued that "stencil skin" falls under Item 17(2) as it is a type of paper. The appellants contested this, stating that "stencil skin" is not used for writing, printing, or packaging, and thus does not fit the common understanding of "paper." They cited several judgments, including the Supreme Court's decision in Macneill & Barry Ltd., which held that specialized papers like ammonia paper and ferro paper are not considered "paper" in the common sense. The Tribunal examined these arguments and concluded that "stencil skin" is not "paper" and should be classified under Item 68, which covers miscellaneous manufactured goods.

Conclusion:
The Tribunal held that "stencil skin" is indeed "goods" and liable to excise duty. However, it should not be classified under Item 17(2) as "paper" but under Item 68 as manufactured goods. The appeal was disposed of accordingly.