1998 (11) TMI 294 - AT - Central Excise

Summary

Issues:
1. Excisability of LDPE film emerging during the manufacturing process of HDPE coated products.

Analysis:
The case involved the manufacturing of LDPE coated HDPE products where the excisability of the LDPE film emerging during the manufacturing process was in question. The officers observed the process of manufacture where LDPE granules were melted and extruded through a slit die to form a film that coated the moving HDPE fabrics. The officers noted the emergence of a transparent film of polyethylene during the process.

Before the Adjudicating Authority, the argument was made that the film emerged in a liquid form, was transient, and physically and chemically unstable. It was claimed that the film existed at a high temperature and if not bonded at that stage, it could not be marketed. The interpretation of the term 'marketability' was crucial, with the claim that the product needed to be capable of being marketed, not necessarily actually marketed.

The Adjudicating Authority considered whether the goods emerged as a separate entity during the manufacturing process and if they formed an integral part of the finished product. It was observed that the final product would not exist in its present form without the goods emerging at an intermediate stage. Consequently, the duty allegedly evaded on this product was confirmed, and a penalty was imposed.

The appellate tribunal referred to various judgments on excisability. In the case of Moti Laminates Pvt. Ltd., the Supreme Court had examined the excisability of a similar product and concluded that if a product was unstable and could survive for a limited period under specific conditions, it was not excisable. The tribunal also cited the case of Bhor Industries Ltd., where certain goods were held to be non-excisable.

In the present case, despite the LDPE film being visible during the process, it was acknowledged that it lasted only momentarily before merging with the fabrics. Drawing on precedents, the tribunal held that no excisable product came into existence as the film did not reach a state of marketability. Consequently, the appeal was allowed, the impugned order was set aside, and consequential relief was directed as warranted.