1987 (8) TMI 190 - AT - Central Excise

Summary

Issues: Classification and dutiability of intermediate product for excise duty under Central Excises and Salt Act, 1944.

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the appellants, engaged in the manufacture of cotton and man-made fabrics, contested the dutiability of an intermediate product under the Central Excises and Salt Act, 1944. The appellants filed a classification list for fabrics containing polyester and cotton, claiming classification under Item No. 22 of the Central Excise Tariff (CET). However, the Assistant Collector directed duty payment on both the final processed fabric and the grey stage fabric under different CET items. The Collector of Central Excise (Appeals) upheld this decision, disregarding the appellants' reliance on a Gujarat High Court judgment. The appellants argued that the intermediate product, with a specific composition, transformed during processing, making the final product fall under Item No. 22 CET.

The judgment highlighted the relevance of the Gujarat High Court judgment, which was subsequently upheld by the Supreme Court. The Supreme Court clarified that the dutiability of the final product should not be determined based on the intermediate stage characteristics. It emphasized that even if the intermediate product met the criteria of a different tariff item, the final product should be taxed based on its classification under the CET. The Tribunal noted that the issue in the present case differed from the Supreme Court case, as it concerned the classification and dutiability of the intermediate product itself, not the final product. The Tribunal emphasized that the product's composition clearly fell under a specific CET item, and the amendment to Central Excise Rules did not alter the liability for duty on goods removed for consumption within the factory for further manufacturing.

Ultimately, the Tribunal found no grounds to overturn the Collector's decision, dismissing the appeal based on the clear classification of the product under a specific CET item. The judgment provided a detailed analysis of the dutiability of intermediate products and the importance of classifying goods based on their final stage characteristics for excise duty purposes.