1990 (5) TMI 119 - AT - Central Excise

Summary

Issues:
- Appeal against the order of the Collector of Central Excise (Appeals) upholding duty payment on bituminised craft paper.
- Claim for refund based on a previous judgment declaring excise duty on bituminised waterproof paper invalid.
- Interpretation of whether bituminised paper qualifies as a distinct commercially marketable commodity and the process of bituminisation as a process of manufacture under the Central Excise Tariff.

Analysis:
1. The appeals challenged the order of the Collector of Central Excise (Appeals) upholding the duty payment on bituminised craft paper. The appellants sought a refund based on a previous judgment by the Madras High Court declaring excise duty on bituminised waterproof paper as invalid. However, the Asstt. Collector and the Collector (Appeals) rejected the claim, leading to the appeal before the Tribunal.

2. The appellants' counsel cited a Bombay High Court judgment stating that coating kraft paper with bitumen does not constitute a process of manufacture, hence not attracting duty under the Central Excise Tariff. In contrast, the department relied on a 5-Member Bench decision of the Tribunal in Guardian Plasticote v. Collector of Central Excise, which concluded that bituminised paper is a distinct commercially marketable commodity, and the bituminisation process amounts to manufacture under the Tariff.

3. The Tribunal, after considering the arguments, referred to its previous decision in Guardian Plasticote case where it was held that when a new distinct commodity emerges with its own character and use, the process amounts to manufacture attracting duty. The Tribunal emphasized that the key question is whether a distinctive product with a unique name and use has been created through the process. It noted industry standards classifying different types of paper, including bituminised waterproof paper, as separate entities, indicating distinct characteristics and uses.

4. The Tribunal further highlighted that the bituminisation process enhances the paper's qualities, such as strength and impermeability to water, creating a new excisable commodity. Despite the Bombay High Court decisions not considering the Tribunal's ruling, the Tribunal, bound by its precedent, upheld the view that bituminised paper qualifies as a distinct commodity and the bituminisation process constitutes manufacture under the Central Excise Act. Consequently, the appeals against the Collector (Appeals) orders were rejected based on the Tribunal's binding precedent.

This comprehensive analysis of the judgment outlines the key issues, legal arguments, and the Tribunal's reasoning, providing a detailed understanding of the decision.