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TMI Blog1990 (3) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause notice was duly answered by the appellant and mainly contended before the Adjudicating authority that (i)neither he was aware of the new Tariff Entry 59A which necessitated the payment of excise duty on recorded cassettes as no publicity was given, nor was liable to pay duty on such recorded cassettes in view of the exemption upto Rs. 5 lakhs under Notification No. 83/83. (ii) There was no intention in evading the payment of duty and he should have been allowed to pay duty under r. 56A in view of the fact that recording itself on unrecorded cassettes produced inIndiawhich is subjected to duty and they have no plain to manufacture cassettes for recording. (iii) Mere recording on cassettes was not a manufacturing activity as no new product has come not existence and intention of the legislature would be to levy duty in respect of those manufactures who manufacture these tapes as well as have the recording thereon. (iv) Non-Magnetic tapes have suffered duty already and the exemption available to Item 68 goods used in the manufacture should be available to him. The Addl. Collector of Central Excise,Cochinwho adjudicated the proceedings negatived all the contentions of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreting language under item 59. Dr. S. Narayanan argued that language used in item No. 59 of the Schedule has to be understood in the background of Budget Speech delivered by Finance Minister for the Year 1982-83 and he drew our attention to the Budget Speech wherein Finance Minister while proposing 25 per cent ad valorem on cassette records and such other goods, exempted, recording which are not for commercial purposes. He said that the intention of introduction of this new Tariff and as per the language used in the Tariff is to levy duty in respect of those manufacturers who manufacture these tapes as well as have the recording thereon but not on the process of mere recording on blank cassettes which have already suffered duty. To understand the intention and real meaning of the Legislation the Speech made by the mover of Bill is relevant and he cited the decision in the case of K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597(SC). Further he argued that in view of the ambiguity or capable of more meaning than one, Court has to adopt the interpretation which favours the assessee, as observed by the Supreme Court in cases of CED vs. V.R. Kanakasabai Ors. 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable to the Department. As per the majority decision it was held that sound recording on cassettes is a manufacturing activity and liable to duty as excisable goods. She stated. that though name continue to be the same but in view of change in characteristic and use of the article it is altogether different commodity and ratio of the decision in the case of Delhi Cloth Gen. Mills Ltd. Others is not applicable. 6. In rejoinder, Dr. S. Narayanan submitted that ambiguity is not ruled out in the language used in the Tariff Item No. 59 and in view of the sound reasoning given by the Judicial Member in the case of Prabhat Associates vs. Collector of Central Excise recording of sound on duty paid magnetic or cassette tapes cannot be considered as 'manufacture'. 7. We have given our anxious consideration to the arguments advanced on both the sides and perused the records. It is evident from the records that appellant has not produced sound recorded cassette tapes as such but he has recorded sound on duty paid blank cassette tapes and same were supplied by him. The crux of the problem in this case is whether sound recording on cassette tapes amounts to a manufacture and as such the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, but excluding cassette tapes. (2) Sound recorded magnetic tapes of width not exceeding 6.5 millimetres, whether in spools or in reels or in any other form of packing but excluding sound recorded cassette tapes. (3) Cassette tapes for sound recording. (4) Sound recorded cassette tapes." The term 'manufacture' either in the Tariff Entry or in any Notification has to be interpreted on the basis of its definition in the parent Statute. What was not in the main definition of term 'Manufacture' cannot be substituted or enlarged either in the Tariff Entry or in the Notification. Even after going through the Tariff Entry it does not give clear picture whether it intends to treat recording sound on blank cassette tapes as manufacturing activity. The term manufacture of articles described in Item 59 - "articles of a kind used for sound recording" - is complete with the manufacture of the magnetic or cassette tapes (Item 59(1) and (3). Nothing more required to render them fit for use for sound recording. Accordingly the expression "whether recorded or not" occurring in item 59, makes it clear that the manufacture of the articles in question is complete without recording. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to him by the customers. 11. Next, the argument advanced by the Departmental Representative that once an article is named or described in the Schedule automatically it is chargeable to duty cannot be accepted because that intention of the Legislature to levy duty on the goods specified as excisable goods in the Schedule provided that they are manufactured. The term manufacture is understood in the sense that a new product should come into existence having a distinct name, character and use in the market. Mere application of a process does not bring about transformation of an original product into a new product and such a process cannot be equated to manufacture. In the present case the products, viz., cassette tapes used for sound recording will not lose its identity and in fact the same cassette tapes can be used number of times for recording and re-recording and it is not the intention of the legislature in levying duty each time when single tape is re-recorded. 12. In the case of Prabhat Associates Ors. vs. Collector of Central Excise, Bangalore though the appeals were rejected by the majority on a number of issues, we feel that this particular issue, viz., 'Recording ..... X X X X Extracts X X X X X X X X Extracts X X X X
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