1991 (5) TMI 173 - AT - Central Excise

Summary

Issues:
- Demand of Central Excise duty on metallised/lacquered PVC films
- Imposition of penalty for contravention of Central Excises & Salt Act
- Confiscation of plant and machinery used in the manufacture of offending goods

Analysis:
1. The Appellate Tribunal CEGAT, New Delhi, heard an appeal against the order of the Collector of Central Excise, Baroda, demanding Central Excise duty on metallised/lacquered PVC films, imposing a penalty, and ordering confiscation of plant and machinery. The appellants contested the order, arguing that metallising and lacquering did not amount to manufacture. The key issue was whether metallising/lacquering of PVC films constitutes manufacture and if such films should be subjected to duty under the Central Excise Tariff.

2. The appellants, in their defense, cited a judgment from the Division Bench of Bombay High Court in a similar case, where it was held that lacquering and metallising of polyester films did not amount to manufacture. The appellants argued that the same principle should apply to their case, as no new distinct commercial commodity emerged from the process. The central question was whether the process of metallising/lacquering created a new product with a different identity or name.

3. Before the judgment was delivered, the appellants submitted a Miscellaneous Application referring to the Bombay High Court judgment, emphasizing its relevance to their case. The Tribunal considered this application and re-opened the matter for further review based on the new information provided by the appellants.

4. The appellants' counsel relied on the Bombay High Court judgment and argued that the change in the tariff description did not necessitate duty on lacquered/metallised films as it did not involve a manufacturing process. The counsel highlighted that the process did not result in a new commercial commodity with distinct properties or uses, as per the Supreme Court's precedent.

5. The appellants' counsel further emphasized the importance of the Garware case as a definitive judgment on the matter, supported by the Tribunal's decision in a related case. The argument centered on the absence of duty liability for metallising/lacquering of PVC films based on established legal precedents and interpretations of manufacturing processes.

6. The Respondent's representative contended that the appellants themselves declared the metallised/lacquered films as such in the Classification List, indicating that they were commercially recognized as distinct products. The argument focused on the nature of the traded goods and whether the process of metallising/lacquering constituted a manufacturing activity.

7. In response to the arguments presented, the appellants' counsel reiterated the significance of the Garware judgment, emphasizing that the burden of proof regarding the creation of a new article rested with the department. The counsel maintained that the conclusions drawn in the Bombay High Court judgment left no room for doubt regarding the duty liability on metallised/lacquered films.

8. After careful consideration of the appeal and arguments from both sides, the Tribunal relied on the Garware judgment, which concluded that lacquering/metallising did not result in a new commercial commodity with a distinct identity. Following this precedent, the Tribunal ruled in favor of the appellants, setting aside the impugned order and granting consequential relief based on the interpretation of the manufacturing process and duty liability in the case.