1998 (4) TMI 334 - AT - Central Excise

Summary

Issues:
- Whether the appellants were liable to pay duty on nickel cylinders used in textile industries.
- Whether the process undertaken by the appellants constituted manufacturing for the purpose of levy of duty.
- Whether the engraved nickel cylinders were marketable products.
- Whether the demand for duty was time-barred.
- Applicability of relevant notifications granting exemptions.

Analysis:

1. Liability to Pay Duty on Nickel Cylinders:
The appellants were engaged in manufacturing man-made fabrics and cotton fabrics and used nickel cylinders for printing. The department alleged that the appellants were manufacturing nickel cylinders without paying duty. The appellants argued that the nickel cylinders were duty paid, purchased from the market, and not new products subject to duty. They also cited relevant Supreme Court decisions and notifications granting exemptions for cylinders used in textile industries.

2. Manufacturing Process and Levy of Duty:
The main contention was whether the process undertaken by the appellants constituted manufacturing for levy of duty. The Tribunal noted that the engraved nickel cylinders were not marketable and were procured from the market on payment of duty. It was held that the process did not bring into existence any new product, as the nickel screen cylinder remained the same even after engraving designs. Citing precedents, the Tribunal concluded that the process did not amount to manufacturing for levy of duty.

3. Marketability of Engraved Nickel Cylinders:
The Tribunal emphasized that the engraved nickel cylinders were not marketable products. The appellants' argument that the cylinders were not new products and were only designed for their own use was considered. The Tribunal relied on departmental clarifications and trade notices to support the finding that the process undertaken did not create a new marketable product subject to duty.

4. Time-Barred Demand and Exemptions:
The appellants contended that the demand for duty was time-barred, as the show cause notice was issued after the relevant period. They also highlighted notifications granting exemptions for cylinders used in textile industries. The Tribunal considered these arguments but primarily focused on the lack of marketability of the engraved nickel cylinders to rule in favor of the appellants.

In conclusion, the Appellate Tribunal held that the process undertaken by the appellants did not amount to manufacturing of new marketable products subject to duty. The Tribunal set aside the demand for duty and penalty, allowing the appeal based on the finding that the engraved nickel cylinders were not new products and thus not liable for duty. The decision was supported by interpretations of relevant legal provisions, precedents, and departmental clarifications.