1996 (7) TMI 268 - AT - Central Excise

Summary

Issues:
- Whether scouring of wool amounts to manufacture for the purpose of Central Excise duty?
- Whether the appellants are liable to pay Central Excise duty on scouring wool?
- Whether the decision in the case of M/s. Punjab Wool Combers Ltd. is applicable to the present case?
- Interpretation of Tariff Item 68 and its application to scoured wool.

Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi challenged the Order-in-Original passed by the Collector of Central Excise, New Delhi, which confirmed the demand of Central Excise duty and imposed a personal penalty on the appellants for scouring wool. The department alleged that scouring of wool amounts to manufacture and is chargeable under Tariff Item 68. The appellants contended that the process of scouring of wool should not be considered as manufacture based on a previous decision involving M/s. Punjab Wool Combers Ltd.

The appellants argued that the Tribunal's decision in the case of M/s. Punjab Wool Combers Ltd. established that scoured wool obtained by the process of removal of greasy matter does not result in a new product and is not dutiable under Tariff Item 68. They claimed that their case was similar to the decision involving M/s. Punjab Wool Combers Ltd. and should be treated accordingly. The department, represented by the SDR, reiterated the findings of the lower authorities regarding the duty liability on scouring wool.

The Tribunal examined the issue and referred to the decision in the case of M/s. Punjab Wool Combers Ltd., where it was held that the process of removing greasy matter from raw wool through scouring does not result in a new product and is not excisable. The Tribunal also considered a circular from the Central Board of Excise and Customs, which clarified that scoured wool should be covered under the classification of raw wool. Based on this analysis, the Tribunal concluded that scouring does not amount to manufacture, and no duty is chargeable on scoured wool. The appeal was allowed in favor of the appellants, following the precedent set by the decision involving M/s. Punjab Wool Combers Ltd.

In light of the above findings, the Tribunal held that the appellants were not liable to pay Central Excise duty on scouring wool. The decision was based on the interpretation of Tariff Item 68 and the application of the principle that scouring does not result in a new excisable product. The Tribunal emphasized that the decision in the case of M/s. Punjab Wool Combers Ltd. was applicable to the present case, leading to the allowance of the appeal and relief for the appellants in accordance with the law.