1997 (11) TMI 199 - AT - Central Excise

Summary

Issues:
1. Whether the assembly of tea chests from unassembled tea chests constitutes a manufacturing process for the purpose of excise duty.
2. Whether the goods were eligible for exemption during the relevant period.
3. Interpretation of the Central Duties of Excise (Retrospective Exemption) Act, 1986.

Analysis:
1. The appeal concerns the assembly of tea chests by M/s. Nelliampathy Tea & Produce Co. Ltd. The Collector Central Excise (Appeals) held that this assembly did not amount to a manufacturing process. The Revenue contended that the assembly involved manufacturing activities using different materials, making the final product distinct from the unassembled components. The issue revolved around whether the assembly constituted a manufacturing process subject to excise duty.

2. The Tribunal noted that prior to the introduction of the new Central Excise Tariff in 1986, tea chests were exempt from excise duty. Although initially, the new tariff did not provide for this exemption, Notification No. 227/86-C.E. issued on 3-4-1986 reinstated the exemption for tea chests. The Tribunal highlighted the Central Duties of Excise (Retrospective Exemption) Act, 1986, which granted retrospective effect to exemption notifications issued under Rule 82(1) of the Central Excise Rules, 1944. Consequently, even if the assembly process was considered manufacturing, the goods were eligible for exemption during the relevant period.

3. The Tribunal referenced the Statement of Objects and Reasons of the Central Duties of Excise (Retrospective Exemption) Act, 1986, emphasizing the intent to maintain effective excise duty rates post the introduction of the new tariff. The Act aimed to rectify unintended changes in duty rates and provide retrospective effect to exemption notifications issued after 1st March 1986. By aligning with the Act's objectives, the Tribunal concluded that the exemption for tea chests applied even during the period in question. Consequently, the Tribunal upheld the Collector's decision, rejecting the Revenue's appeal due to the goods' eligibility for exemption under the retrospective provisions of the Act.