1997 (3) TMI 198 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 152/87-C.E. and Notification No. 71/68-C.E.
2. Excisability of compounded rubber and rubber products in the form of plates, sheets, and strips.
3. Applicability of duty exemption on compounded rubber used in manufacturing goods falling under Chapter 40.
4. Consideration of shelf life and marketability of rubber compound.
5. Acceptance of appellant's contentions by Collector, C.E. Chandigarh.
6. Time-barred show cause notice.
7. Compliance with conditions for duty exemption under Notification No. 71/68.

Analysis:

The case involved appeals against the order of the Collector (Appeals) Central Excise, Chandigarh dated 24-6-1991, concerning the excisability of compounded rubber and rubber products in the form of plates, sheets, and strips. The appellants, SSI Units manufacturing rubber footwear, argued that the compounded rubber used in their factory for manufacturing rubber sheets and strips, which are further used for making rubber soles, should be exempt from excise duty under Notification No. 152/87-C.E. and Notification No. 71/68-C.E. The appellants contended that both the compounded rubber and rubber sheets/strips fall under Chapter 40, justifying the duty exemption.

The appellants relied on the language of Notification No. 152/87, which explicitly exempts compounded rubber used in the factory for manufacturing goods falling under Chapter 40. The Tribunal agreed with the appellants, emphasizing that the plates, sheets, and strips manufactured during the shoe-making process are excisable materials classified under Chapter 40. The Tribunal referenced a previous case, Umbergaon Rubber Ind. v. Collector of Central Excise, to support the view that the rubber compound, even in an intermediate stage, qualifies for the duty exemption under Notification No. 152/87.

Regarding Notification No. 71/68, which exempts rubber products in the form of plates, sheets, and strips, the Tribunal noted that the benefit is subject to certain conditions, including non-availment of duty credit on inputs under specific rules. The Tribunal acknowledged the complexity of excisability of compounded rubber, highlighting variations in composition, stability, marketability, and shelf life. The Tribunal refrained from making a definitive ruling on the excisability of compounded rubber due to insufficient evidence and the case's resolution based on the interpretation of the notifications.

The Tribunal also considered the acceptance of the appellants' contentions by the Collector, C.E. Chandigarh, as evidenced by a letter dated 3-9-1991. The letter confirmed that compounded rubber used in manufacturing plates, strips, and sheets for footwear remained exempt from duty. Additionally, the Tribunal addressed the time-barred show cause notice and the compliance requirements for duty exemption under Notification No. 71/68, ultimately setting aside the order of the Collector (Appeals) and ruling in favor of the appellants.