1987 (4) TMI 207 - AT - Central Excise

Summary

Issues: Determination of liability to central excise duty on asbestos products used captively for further manufacture.

Analysis:
1. Interpretation of Tariff Item 22F(4): The dispute revolved around whether certain asbestos products used as intermediate goods in the manufacture of automotive brake linings and clutch facings were liable to central excise duty under Item 22F(4) of the Tariff. The appellants argued that the products were not fully manufactured goods and hence not liable to duty. They relied on a Supreme Court judgment regarding aluminium cans to support their contention. However, the Tribunal found that the facts of the aluminium cans case were distinguishable, as the disputed asbestos products were in a finished form after the 4th stage of manufacture and were fully manufactured asbestos products. The Tribunal clarified that the duty was sought to be levied at the appropriate stage of manufacture under the relevant tariff entry.

2. Marketability of Products: The appellants contended that the disputed asbestos rings and fabrics were not marketable as they were not sold separately and were only used captively for further manufacturing processes. The Tribunal disagreed, emphasizing that the products were high-value, finished asbestos goods capable of being marketed to industrial users, specifically those engaged in manufacturing brake linings and clutch facings. The Tribunal highlighted that central excise duty is imposed on manufacture or production, not just on sale, and industrial goods do not cease to be 'goods' due to limited marketability within a specific industry segment.

3. Interpretation of Central Excise Rules: The appellants argued that Rules 9 and 49 of the Central Excise Rules should be interpreted to avoid duty at every stage of manufacture. However, the Tribunal clarified that the department sought duty only at two specific stages: when the identifiable asbestos products merged under Item 22F(4) and when the final motor vehicle parts emerged under Item 34A of the Tariff. The Tribunal noted that duty was not sought at every stage of manufacture, as claimed by the appellants.

4. Conclusion: After thorough consideration of the arguments and evidence presented, the Tribunal dismissed the appeal, concluding that the disputed asbestos rings and fabrics were indeed liable to central excise duty as finished and identifiable asbestos products falling under the description of Item 22F(4) of the Tariff. The Tribunal upheld the department's position that the products were goods and subject to duty, based on their marketability and compliance with the tariff provisions.