1997 (12) TMI 217 - AT - Central Excise

Summary

Issues:
- Interpretation of exemption notification No. 53/88 for excise duty on plastic films
- Whether the benefit of the exemption notification applies to the input materials used in manufacturing the final product
- Determining if the process of metallizing/lacquering/laminating plastic films amounts to manufacturing
- Consideration of Board circulars and instructions in excise duty assessment

Analysis:
The appeal before the Tribunal involves the interpretation of exemption notification No. 53/88 concerning the excise duty on plastic films. The issue at hand is whether the benefit of the exemption applies to the input materials used in the manufacturing process of the final product. The department argued that the condition precedent for the exemption is that raw materials used as input should fall under specific headings, which the plastic film used by the respondent did not meet. The Collector (A) set aside the demand based on this argument, but the department contended that extending the exemption in this case would lead to discrimination against other manufacturers paying duty at statutory rates. The Tribunal noted that the exemption extinguishes once the specified inputs are used in manufacturing, and this benefit cannot be repeatedly offered to excisable articles using previously exempted materials.

Regarding the process of metallizing/lacquering/laminating plastic films, the Tribunal considered whether this constitutes manufacturing. The respondent argued that this process does not amount to manufacture, citing relevant Board letters and conference decisions. However, the Tribunal emphasized that even if the input and output fall under the same heading, excise duty may still apply if a new product emerges during the production process. The lack of evidence supporting the contention that no new product emerges led the Tribunal to reject this argument.

The Tribunal also discussed the relevance of Board circulars and instructions in excise duty assessment. While acknowledging the binding effect of Board instructions, the Tribunal noted that conflicting instructions require a determination of the more appropriate one. In this case, the Tribunal found the circular dated 10-1-1989 relevant, indicating that metallized plastic films are not manufactured from duty-paid plastic raw materials specified in the notification. This supported the Tribunal's decision to set aside the impugned order and accept the department's appeal.