1985 (7) TMI 256 - AT - Central Excise

Summary

Issues:
1. Permission to send materials for further processing under Rule 56A(7) of Central Excise Rules.
2. Interpretation of Rule 56A(7) in the context of manufacturing processes.
3. Applicability of Trade Notices in excise matters.

Issue 1: Permission under Rule 56A(7)
The case involved M/s Coromandel Paints and Chemicals Ltd. seeking permission to send alkali refined linseed oil and refined castor oil to another factory for manufacturing alkyd resins, which are used in the production of paints and varnishes. The Assistant Collector rejected the request, but the Collector of Central Excise (Appeals) allowed the appeal, emphasizing the necessity of the alkyd resin manufacturing process for paints and varnishes. The Collector of Central Excise, Guntur, appealed against this decision.

Issue 2: Interpretation of Rule 56A(7)
The appellant cited a Tribunal decision stating that alkyd resin is excisable and exempt from duty, hence not eligible for certain concessions. They also referenced a case where a similar claim for concession was denied due to non-compliance with notification procedures. The argument was that necessary manufacturing operations should be done within the factory receiving raw materials, as per Rule 56A(7).

Issue 3: Applicability of Trade Notices
The respondent relied on Trade Notices stating that certain operations, like preparing alkyd resin, for the manufacture of paints and varnishes could be considered under Rule 56A(7). However, subsequent modifications clarified that the operation should not render the goods fit for marketing. The Tribunal noted that Trade Notices are not binding and emphasized that the raw materials were not partially processed before being sent to the second factory, making the request ineligible under Rule 56A.

In conclusion, the Tribunal upheld the Assistant Collector's decision to refuse permission for the transfer of materials for further processing, as the manufacturing process did not align with the requirements of Rule 56A(7). The order of the Collector (Appeals) was set aside, and the original decision was restored.