Central Excise - Excisability of glues used in the cigarette industry - Regarding - Central Excise - 19/89

Central Excise - Excisability of glues used in the cigarette industry - Regarding Circular No. 19/89 Dated 28-3-1989 [From F. No. 128/2/88-CX.3] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Central Excise - Excisability of glues used in the cigarette industry - Regarding. A doubt had been raised as to whether glues/pastes/gums and similar types of adhesives derived from duty paid starch, duty-paid dextrine etc., which are captively consumed within the cigarette factories for pasting cigarette seams and for other pasting purposes, could be treated as excisable 'goods' for the purpose of levying central excise duty. 2. The matter has been examined. It is reported that cigarette factories bring duty-paid starch powder, dextrine powder etc. from outside. In the case of starch, water and steam are added to starch powder which is heated before using it on cigarette-making machines for pasting cigarette seams. The processing of starch in this manner dissolves the starch powder into a glue-like substance for easy application on the cigarette paper. The dissolved starch has a very limited shelf-life of less than a day and is consumed within this period in the cigarette factory. In the case of dextrine, water and steam are added to dextrine powder, and the resulting liquid paste is used for pasting the gay - wrappers and CFCs. The shelf-life is reported to be the same. However, the normal shelf-life of such goods can reportedly be enhanced for a little longer duration in case of holidays in the factory by addition of ureaformaldehyde. It has also been ascertained that such goods do not ordinarily come to the market to be bought and sold. 3. The matter has been examined. In this connection, Board's attention has been drawn to their letter F.No. 128/1/86-CX.3, dated 3-3-1987 wherein it had been decided that 'leiee paste' prepared in biri factories and used within such factories as an adhesive for sticking tissue paper (Jhilli) and labels of biri kattas (smallest retail packs) may not appropriately come within the meaning of 'goods' for the purpose of charging excise duty. This decision was taken by applying the ratio of Supreme Court's judgment in the case of M/s. Union Carbide India Limited v. Union of India and Others in Civil Appeal No. 1103 of 1972. A similar decision was taken on similar grounds in the case of 'composition for match heads' and 'side painting liquids' vide Board's letter F.No. 108/2/88-CX.3 dated 20-6-1988 . The Board is of the view that the ratio of the decision taken vide Board's F. No. 128/1/36-CX.3, dated 3-3-1987 and F.No. 108/2/88-CX.3, dated 20-6-1988 in the case of 'leiee paste' and 'composition for match heads' and 'side painting liquids' should also apply in respect of the above-mentioned products. This apart, it has also been reported that goods similar to the goods in question are not ordinarily available in the market. 4. The above guidelines may be brought to the notice of the lower field formations and trade interests may also be suitably advised. 5. All pending assessments may be finalised on the above basis.