1988 (6) TMI 122 - AT - Central Excise

Summary

Issues:
1. Refund of excise duty on untrimmed hardboard
2. Liability of untrimmed hardboard to new excise levy

Analysis:
The case involved a claim for a refund of excise duty on untrimmed hardboard manufactured by the appellants. The dispute centered around whether untrimmed hardboard, which was stocked before the imposition of a new excise duty but cleared after the levy, should be subject to the new levy. The Revenue contended that trimming was essential to make hardboard marketable and, thus, goods cleared after the levy attracted the new duty. Conversely, the appellants argued that untrimmed hardboard was a marketable commodity and did not require trimming for completion. The issue had a chequered history of appeals and revisions before reaching the Tribunal for consideration.

The Kerala High Court, in its judgment, discussed the issue extensively but left it unresolved due to the lack of reasoning by the Revisional Authority regarding the marketability of untrimmed hardboard. During the Tribunal proceedings, the appellants relied on the High Court judgment, emphasizing that if untrimmed hardboard was marketable, post-levy trimming did not render it excisable. Reference was made to a stock-taking report noting that the untrimmed hardboard was in deliverable condition. Additionally, the appellants cited a Supreme Court judgment regarding the excisability of plywood at different stages of production.

The Tribunal, after considering submissions from both sides, relied on the Supreme Court precedent related to plywood manufacturing. The Tribunal held that untrimmed hardboard, similar to plywood in the cited case, was a marketable commodity even without trimming. The Revenue failed to provide evidence to the contrary, and the appellants' evidence of marketability remained unchallenged. Consequently, the Tribunal ruled that the stock of untrimmed hardboard was not subject to the new excise levy. The orders of the lower authorities were set aside, and the appeal was allowed in favor of the appellants, granting them consequential relief.