1997 (1) TMI 267 - AT - Central Excise

Summary

Issues:
1. Interpretation of Tariff Item : 14-I(3)(iii) for duty liability on dual packing of Aluminium Paste and Medium.
2. Whether the mixing of Aluminium Paste and Medium in separate containers constitutes manufacture.
3. Comparison of the present case with the precedent in Commissioner of Central Excise v. Kalinga Paints & Chemicals Industries.
4. Analysis of the Tribunal's decision in India Paint Colour & Varnish Co. Ltd. v. Collector of Central Excise, Calcutta.

Interpretation of Tariff Item : 14-I(3)(iii):
The case involved a dispute over the duty liability on dual packing of Aluminium Paste and Medium under Tariff Item : 14-I(3)(iii). The respondent company, formerly M/s. British Paints India Ltd., availed Proforma Credit benefit for using Aluminium Paste in their finished product, Aluminium Paint. The lower appellate authority ruled in favor of the respondent, stating that duty liability is discharged when the components are cleared separately. The Revenue appealed, arguing that the dual packing should be considered as Ready Mixed Paint and duty should be charged. The respondent relied on the precedent set by the Tribunal in Commissioner of Central Excise v. Kalinga Paints & Chemicals Industries, where it was held that putting separate containers in a single container does not amount to manufacture.

Manufacture of Aluminium Paint:
The key issue was whether the mixing of Aluminium Paste and Medium in separate containers constitutes manufacture. The Tribunal referenced the Kalinga Paints case, emphasizing that until the two components are mixed, they cannot be considered Ready Mixed Paint. The Tribunal agreed with the respondent that the goods, as cleared, do not qualify as Ready Mixed Paint, supporting the lower appellate authority's reasoning. The Tribunal highlighted that the final product emerges only after consumer mixing, and thus, the duty liability is discharged upon clearance of individual components.

Comparison with Precedent - Commissioner of Central Excise v. Kalinga Paints & Chemicals Industries:
The Tribunal compared the present case with the precedent in Commissioner of Central Excise v. Kalinga Paints & Chemicals Industries, where it was established that combining separate containers in a single container does not amount to manufacture. The Tribunal reiterated that duty liability is fulfilled upon clearance of individual components, aligning with the decision in the Kalinga Paints case. The Tribunal found that the Kalinga Paints precedent endorsed the reasoning of the lower appellate authority in the current case.

Analysis of Tribunal's Decision in India Paint Colour & Varnish Co. Ltd. v. Collector of Central Excise, Calcutta:
The Tribunal analyzed the decision in India Paint Colour & Varnish Co. Ltd. v. Collector of Central Excise, Calcutta, where the issue revolved around charging duty on products yet to emerge after mixing. The Tribunal held that duty cannot be imposed on a product that is yet to form, emphasizing that duty liability is based on the products as they are cleared. The Tribunal concluded that the Revenue's appeals lacked substance and dismissed them based on the principles established in the India Paint Colour case.

In conclusion, the Tribunal upheld the lower appellate authority's decision, ruling in favor of the respondent company and dismissing the Revenue's appeals based on the interpretation of Tariff Item : 14-I(3)(iii) and the precedents set in similar cases.