1985 (2) TMI 186 - AT - Central Excise

Summary

Issues:
1. Interpretation of exemption Notifications No. 68/71-CE and No. 38/73-CE for the manufacture of acrylic plastic tubes and bangles.
2. Application of Notification No. 143/80-CE and Rule 9A(5) of Central Excise Rules for duty payment.
3. Definition of "articles made of plastic" under Item 15A of Central Excise Tariff.
4. Impact of Gujarat High Court judgment on the classification of plastic bangles made from monomer undergoing polymerization.

Analysis:
The case involved a dispute regarding the manufacture of acrylic plastic tubes and bangles by M/s. Natwar Lal Bhikhabhai. The Collector of Central Excise, Ahemdabad, ruled that the exemption Notifications No. 68/71-CE and No. 38/73-CE did not apply, and duty should be charged on the goods produced and cleared between January 1977 to December 1979, imposing a penalty as well.

The Board, in the appeal, set aside the penalty, citing no clandestine removal of goods and the non-applicability of duty due to Rule 9A(5) of Central Excise Rules and Notification No. 143/80-CE. However, the Central Excise Department argued that the retrospective application of the notification was impermissible, and the Board's decision was incorrect, lacking legal sanction.

The Counsel for M/s. Natwar Lal referenced the Gujarat High Court judgment, stating that articles made from monomer undergoing polymerization do not fall under Item 15A of Central Excise Tariff. They further argued that Notification No. 143/80-CE unconditionally exempted such bangles from duty from September 1980 onwards, negating the duty recovery claim.

The Department's Counsel contested the Gujarat High Court decision's finality, as it was under appeal in the Supreme Court. However, the Board's findings were deemed incorrect as Notification No. 143/80-CE could not be applied retrospectively to goods cleared before its issuance. The misapplication of Rule 9A(5) was highlighted, emphasizing the specific dates for duty determination based on removal circumstances.

The judgment acknowledged that plastic bangles and tubes made from monomer undergoing polymerization are considered articles of plastic under Item 15A. Yet, considering the Gujarat High Court's ruling, plastic bangles made from such monomers were not assessable under Item 15A. Consequently, the notice issued by the Government of India was set aside based on this interpretation.