1998 (2) TMI 300 - AT - Central Excise

Summary

Issues:
1. Whether the activity of covering uncovered pillows with new material constitutes further manufacturing and attracts differential duty.
2. Whether the uncovered pillows are exempted under Notification 108/73.
3. Whether carry-cots fall under the exemption provided in Notification 69/71.

Analysis:
1. The appeal was filed against an order demanding duty on covering uncovered pillows with new material, contending it as further manufacturing. The Tribunal referred to a previous decision exempting pillows made from shreds under Notification 108/73. The Tribunal held that since uncovered pillows themselves were exempt under the notification, demanding duty on covered pillows as a new product was not legal. The characteristics of the pillows remained the same even after covering, thus differential duty was not justified.

2. The appellant relied on Notification 108/73 exempting articles made from waste or scrap of polyurethane foam. The Tribunal found that pillows made from shreds were exempt under this notification. The Tribunal emphasized that the shredded material and C grade sheets used in manufacturing the pillows were considered waste and scrap, making the pillows exempt. The Tribunal concluded that the appellant's pillows, whether covered or uncovered, were manufactured from waste or scrap of polyurethane foam, entitling them to the benefit of the notification.

3. The issue of carry-cots was raised, with the department arguing that they were not covered under the exemption of Notification 69/71. However, the Tribunal found that carry-cots were manufactured by stitching cushions, which fell within the purview of mattresses and similar items mentioned in the notification. The Tribunal concluded that as carry-cots were made of cushions and stitched, they qualified for the exemption under the notification, ultimately allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the activity of covering pillows did not amount to further manufacturing, the uncovered pillows were exempt under Notification 108/73, and carry-cots qualified for exemption under Notification 69/71.