1990 (9) TMI 190 - AT - Central Excise

Summary

Issues:
1. Whether duty is chargeable on single ply strawboard used for manufacturing multiple ply strawboard.
2. Interpretation of Rule 9 of the Central Excise Rules regarding the liability of duty on single ply strawboard.
3. Application of Notification No. 20/82-C.E. and Notification No. 62/82 in determining duty liability.
4. Comparison of different judgments to ascertain the liability of duty on the single ply strawboard.
5. Determination of whether single ply and multiple ply strawboards constitute distinct commodities for the purpose of duty imposition.

Detailed Analysis:
1. The case involved a dispute regarding the duty liability on single ply strawboard used in the manufacturing process of multiple ply strawboard. The department contended that duty should be charged on the single ply strawboard as it was utilized in the production of a different commodity, i.e., multiple ply strawboard. The Assistant Collector initially dropped the proceedings, stating that there was no essential difference in the end use of single ply and multiple ply strawboard. The Collector of Central Excise (Appeals) also rejected the application under Section 35E(4) based on the tariff description not distinguishing between single and multiple ply strawboards.

2. The Appellant Collector argued that as per the Explanation to Rule 9(1) and Notification No. 20/82-C.E., duty should be imposed on the single ply strawboard stage since it was utilized in manufacturing multiple ply strawboard. On the contrary, the learned JDR cited a Bombay High Court decision to assert that no further manufacture occurred in converting single ply strawboard to multiple strawboard, suggesting that duty should be charged at the single ply stage, whether for captive use or removal from the factory.

3. The respondents relied on a Tribunal decision in a similar case to argue that duty should not be imposed at both stages if the products are not distinct in name, character, or use. The Tribunal found the facts in the instant case identical to the referenced case, emphasizing that both single ply and multiple ply strawboards fell under the same Tariff Item 17, precluding the imposition of duty at the single ply stage if already charged at the multiple ply stage.

4. The Tribunal rejected the Appellant Collector's interpretation of Notification No. 62/82, stating that the notification did not imply the conversion of single ply strawboard into multiple strawboard as a manufacturing process. It clarified that the notification exempted duty if the product was used for further manufacturing within the factory, emphasizing the principle of charging duty at the later stage for the same commodity.

5. Ultimately, the Tribunal dismissed the appeal, affirming that single ply and multiple ply strawboards did not constitute distinct commodities warranting duty imposition at both stages. It emphasized that the consistent finding throughout the case was that no new commodity emerged from the manufacturing process, thereby rejecting the analogy drawn by the Appellant Collector and upholding the decision based on the facts and circumstances of the case.