1998 (6) TMI 273 - AT - Central Excise

Summary

Issues: Duty liability on resin impregnated cotton fabrics.

In the judgment delivered by the Appellate Tribunal CEGAT, New Delhi, the issue revolved around the duty liability on Resin Impregnated Cotton Fabrics, considered intermediate goods in the production of laminates by M/s. Pratap Rajasthan Copper Foils & Laminates. The appellants argued that the fabrics were not marketable, thus no duty liability should apply under Item No. 19(III) of the erstwhile Central Excise Tariff. The Collector of Central Excise (Appeals) upheld the view that the fabrics were classifiable under Item No. 19(III).

The main argument presented by the appellants was that the resin impregnated cotton fabrics were not ready for delivery as further processing of drying and cutting was required for marketability. The Respondent contended that marketability was the key factor for duty imposition, regardless of actual marketing. They referred to precedents like Formica India Division v. CCE and highlighted that the fabrics were used in the manufacturing process of final products classified under a different item in the Central Excise Tariff.

The Tribunal analyzed the case, noting that the appellants were engaged in manufacturing laminates using resin and cotton fabrics. They emphasized that marketability is a factual question, citing the Supreme Court's decision in A.P. State Electricity Board v. CCE, which clarified that goods need not be generally available in the market to be considered marketable. The Tribunal also referenced the Formica India Division case, confirming the classification of resin-coated cotton fabrics under Item No. 19(III) of the Tariff.

Regarding the applicability of previous judgments, the Tribunal differentiated the case from Collector of Central Excise v. General Cement Products (P) Ltd., emphasizing that the impregnated fabrics were used in manufacturing and were classifiable under the Tariff. They also discussed the BHEL v. CCE case on import classification, finding it dissimilar to the present case.

In conclusion, the Tribunal found no merit in the appeal, upholding the duty liability on resin impregnated cotton fabrics. However, regarding Modvat credit, they acknowledged the possibility of extending the credit to the appellants if eligible, subject to verification and relevant laws during the period. The Tribunal emphasized that eligibility for credit should be considered independently of duty payment obligations, citing previous decisions supporting such an approach.