1990 (3) TMI 217 - Commissioner - Central Excise

Summary

Issues:
- Classification of rubber soles under Central Excise Tariff
- Eligibility for exemption under Notification No. 175/86-C.E.
- Manufacturing status of the respondents
- Application for setting aside the Assistant Collector's order

Classification of Rubber Soles:
The case involves a dispute regarding the classification of rubber soles manufactured by M/s. Industrial Products under Chapter 41 of the Central Excise Tariff, 1985. The respondents claimed exemption for the product under Notification No. 175/86-C.E. The classification lists were approved, allowing exemption to the goods under the said notification.

Eligibility for Exemption:
The department filed an application to set aside the Assistant Collector's order, arguing that the respondents were not eligible for exemption under Notification No. 175/86-C.E. as they manufactured the rubber soles on job charges basis using raw materials supplied by another company. The department relied on a Supreme Court decision to support its argument. In response, the respondents contended that they were manufacturers of goods within the meaning of the Central Excises and Salt Act, as they operated independently, had their own factory, plant, machinery, and technical know-how, and did not have any binding agreement with the company supplying raw materials.

Manufacturing Status of Respondents:
The key issue in the case was whether M/s. Industrial Rubber Producers could be considered a genuine manufacturer or merely a dummy unit. The department failed to provide evidence to establish that the respondents were not an independent manufacturing unit. The respondents argued that they operated autonomously and were not merely hired labor. They emphasized their independence, lack of agreements with the raw material supplier, and compliance with statutory provisions.

Application for Setting Aside Order:
After considering the arguments and contentions of both parties, the Collector (Appeals) upheld the Assistant Collector's order approving the classification lists and granting exemption to the rubber soles. The Collector rejected the department's application, stating that there was no evidence to support the claim that the respondents were not genuine manufacturers. Additionally, the Collector noted that the time limit for recovery of duty had expired, and the department's application lacked merit and was infructuous. The decision was based on the respondents' autonomy in manufacturing and compliance with legal provisions, as well as the inapplicability of the Supreme Court decision cited by the department.