1988 (5) TMI 131 - AT - Central Excise

Issues Involved:
1. Whether the plastic shells manufactured by the respondents are "goods."
2. Whether these plastic shells are excisable under Central Excise Duty.
3. Correct classification of the plastic shells.

Detailed Analysis:

1. Whether the Plastic Shells Manufactured by the Respondents are "Goods":
The primary issue revolves around whether the plastic shells produced by the respondents qualify as "goods." The Assistant Collector initially held that the plastic shells made from H.D.F. granules are goods and liable to duty. However, the Collector of Central Excise (Appeals) overturned this decision, stating, "The only issue to be decided in these cases is whether the plastic moulded parts manufactured by the appellants are 'goods' or otherwise." The Collector noted that these shells are specifically designed for Universal Luggage Manufacturing Company and do not come into the market for being bought and sold. The shells are only usable for specific types, shapes, sizes, and colors of plastic molded luggage, making them semi-finished products and not "goods" as they do not meet the necessary marketability criterion.

2. Whether These Plastic Shells are Excisable Under Central Excise Duty:
The Collector of Central Excise (Appeals) ruled that the shells are not excisable as they do not come to the market to be bought and sold, citing the Supreme Court's judgment in the Delhi Cloth and General Mills case. The Tribunal further examined this issue, considering arguments from both sides. The Revenue argued that the shells, being intermediate goods, are excisable. However, the respondents countered that the shells are not sold to Universal and are merely returned after manufacturing, thus not qualifying as excisable goods. The Tribunal referenced the Supreme Court's judgment in Union Carbide of India Ltd. v. Union of India, which held that intermediate products not marketable as goods are not excisable. Following this precedent, the Tribunal concluded that the shells are not goods liable to excise duty.

3. Correct Classification of the Plastic Shells:
The Revenue classified the HDPE Granules under Item No. 15A(1) CET and argued that the plastic shells should be classified under Heading 15A(2). The Tribunal reviewed previous judgments, including Amber Bearing Manufacturing Co. v. Collector of Central Excise, which held that even semi-finished articles could be considered goods. However, the Tribunal distinguished this case from the current one, noting that the shells require further processing before becoming part of travel goods. The Tribunal concluded that the shells do not meet the criteria to be classified as finished goods and are not subject to excise duty.

Separate Judgment:
Dissenting Opinion by V.P. Gulati, Member (Technical):
V.P. Gulati disagreed with the majority decision, arguing that the shells are indeed goods for the purpose of Central Excise levy. He noted that the shells are in a ready-to-use form and do not require further manufacturing processes to be used as components in suitcases. He emphasized that the marketability criterion does not necessitate actual market presence but rather the capability of being brought to the market. Citing the Bombay High Court's judgment in J.K. Synthetics Ltd. v. Collector of Central Excise, he argued that the shells are excisable and allowed the appeal of the Revenue. He also suggested that if the goods are held chargeable to duty, the benefit of Rule 56A should be extended to the respondents.

Conclusion:
The Tribunal, following the Supreme Court's precedent, held that the plastic shells manufactured by the respondents are not goods liable to excise duty and dismissed the appeals. However, the dissenting opinion argued that the shells are excisable and recommended the application of Rule 56A for duty set-off.

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