1998 (5) TMI 182 - AT - Central Excise

Summary

Issues:
1. Whether the conversion of cotton and viscose fibre into laps constitutes the manufacture of a new product leviable to duty?
2. Whether the appellants are liable to pay duty on the laps produced from the fibre?
3. Interpretation of the term "manufacture" in the context of excisable goods.
4. Comparison of the processes undertaken by the appellants with relevant legal precedents.

Analysis:

Issue 1:
The Revenue argued that converting cotton and viscose fibre into laps resulted in the manufacture of a new product subject to duty under Tariff Item 68. The lower authority confirmed duty and imposed a penalty, leading to the appeal. The appellants contended that no new commodity was created as they only changed the form of the fibre without transforming it into a new product. They relied on legal definitions of "manufacture" to support their argument.

Issue 2:
The Consultant for the appellants argued that no duty could be levied unless excisable goods were manufactured. They claimed that the process undertaken did not result in the creation of a new commodity with a different name, character, and use. Legal judgments from the Apex Court and the Calcutta High Court were cited to support this position.

Issue 3:
The JDR representing the Revenue reiterated that the processes involved in creating the laps constituted manufacturing activities, resulting in the production of distinct goods classifiable under the Central Excise Tariff. A previous Tribunal judgment was referenced to support this argument, highlighting the creation of a new commodity through specific processes.

Issue 4:
Upon considering both parties' arguments and examining a sample of the laps, the Tribunal concluded that no new commodity emerged from the appellants' process of cleaning and compressing the fibre to create laps. The Tribunal found the legal precedents cited by the appellants relevant to the case, while the reference made by the JDR to a previous judgment was deemed irrelevant due to the different nature of the products involved. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants, relieving them of duty liability on the laps produced from cotton and staple fibre.

This comprehensive analysis of the judgment highlights the key legal arguments, interpretations of relevant legal terms, and the Tribunal's decision based on the facts presented and legal precedents cited during the proceedings.