1987 (5) TMI 271 - AT - Central Excise

Summary

Issues: Classification of goods under Central Excise Law, Duty liability on coloured polystyrene compound, Interpretation of Rule 9 of Central Excise Rules

Classification of goods under Central Excise Law:
The judgment revolves around the classification of coloured polystyrene compound under Central Excise Law. The Tribunal had previously classified the product under Tariff Item 15-A(1)(ii) instead of Tariff Item 68. The representative for the assessee agreed with this classification but contested the duty payment timing. The Tribunal analyzed various judgments cited by the representative and emphasized that the duty should be paid on the value of the coloured compounds when they are removed from the factory. The Tribunal differentiated this case from others where duty was paid on goods purchased by the manufacturer and then processed, highlighting that in this instance, the uncoloured polystyrene was used for captive consumption in the factory for colouring purposes.

Duty liability on coloured polystyrene compound:
The key issue addressed was the duty liability on the coloured polystyrene compound. The Tribunal rejected the representative's argument that duty should be paid on the value of uncoloured polystyrene compound when taken to the colouring section. The Tribunal relied on Rule 9 of the Central Excise Rules, emphasizing that duty is required to be paid when the goods are removed from the factory for consumption, export, or manufacture of another commodity. The Tribunal clarified that in this case, duty is only leviable at the coloured stage when the goods are removed from the factory. The Tribunal disregarded the department's previous demand for duty at the uncoloured stage, stating that any wrong practice by the department cannot benefit the assessee.

Interpretation of Rule 9 of Central Excise Rules:
The judgment delved into the interpretation of Rule 9 of the Central Excise Rules. The Tribunal highlighted that the rule mandates duty payment when goods are removed from the factory for consumption, export, or manufacture of another commodity. The Tribunal explained that the processing of colouring uncoloured polystyrene within the same factory does not constitute removal for the manufacture of another commodity. The explanation to Rule 9 clarified that excisable goods used after processing are deemed to have been removed for consumption or utilization. Therefore, the Tribunal concluded that duty is only applicable at the coloured stage when the goods are removed from the factory, in line with its earlier order.

This judgment provides a detailed analysis of the classification of goods under Central Excise Law, the timing of duty liability on coloured polystyrene compound, and the interpretation of Rule 9 of the Central Excise Rules. It clarifies the application of duty based on the stage of processing and removal of goods from the factory, emphasizing the specific provisions of the law in determining duty liability for coloured compounds in the manufacturing process.