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TMI Blog1981 (9) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Department, with a view to impugn the directions of the said Department issued to the petitioners to take out licences for the manufacture of rubberised cloth, and to pay duty on the same with immediate effect. The demand is contained in the letters issued by the Superintendents, Central Excise, Jullundur, to petitioner No. 1, copies whereof have been annexed as Annexures 'P1' and 'P3'. It is stated that similar demands have been made from the other petitioners by the respective Divisions of the Central Excise, dealing with their cases. 2. In order to understand the controversy, a brief reference to the pleadings of the parties would be necessary. The petitioners are manufacturers and dealers of Transmission Rubber Beltings/V. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents, the details of the process of manufacture as noticed above, are not admitted and the contention raised on behalf of the respondents is that the intermediary product, which is cotton canvas or fabric impregnated with Rubber Paste and which in trade parlance is known as Friction Cloth, would attract Central Excise Duty under Tariff Item No. 19(1)(b) of Central Excise Tariff (hereinafter referred to as Tariff), as rubberised cotton fabric and consequently the petitioners are required to take a licence in Form L.4, and to observe the various Central Excise formalities apart from paying the Central Excise Duty on the said item. During the course of the arguments, it has not been disputed that the petitioners are already paying the req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employed, the liability to pay excise duty would be attracted on the completion of every such process. After hearing the learned counsel for the parties at considerable length, we find that the contention of the learned counsel for the petitioners merits a favourable consideration. A perusal of the provision reproduced above, would show that cotton fabrics may be subjected to one or more of the several processes mentioned therein, for creating an end-product. Taking an example, the manufacture of a superior type of printed cotton fabric may undergo the process, first of water-proofing, with a view to make it shrink-proof. Thereafter, the same material may have to be bleached, mercerised, dyed, and then printed, before it is ready for being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is stand in the Writ Petition that the process of manufacture was one of that type. However, the attention of the learned counsel was invited to the averment made in Ground No. (vii) of the Writ Petition where it was specifically mentioned that the intermediate product produced was used for obtaining an end-product in an uninterrupted process of manufacture. This fact has indeed been denied in the return filed by the respondents, but there is no reason mentioned for this denial, and it is merely repeated that the intermediary product would attract duty under Item No. 19(1)(b) of the Tariff. The learned counsel for the respondents has also urged that the intermediary product, i.e., the Friction Cloth, is a marketable commodity and hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This was a case where whole milk powder which becomes time expired, is regenerated into fluid milk by applying a mechanical process and by a further manufacturing process, the whole milk powder is converted into skimmed milk as well as butter. On the facts of this case, it was rightly held that two manufacturing processes bring two different sets of products into existence which are marketable, and hence excise duty would be payable on these two products. The authority has, however, no relevance in so far as the present case is concerned. In another case cited as Indian Vegetable Products Limited v. Union of India and Others, 1980 (6) E.L.T. 704 (Bom.), it was found that as vegetable tallow is used further for manufacture of soaps etc., it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the matter our careful consideration, we find that in so far as the present case is concerned, there is no manner of doubt that the process of manufacture of Transmission of T.R. Beltings/V. Shaped Belts and Conveyor Belts, produced by the petitioners, is a composite, integrated and uninterrupted process and even if some article styled as "Friction Cloth" comes into existence at an intermediary stage, the Department is not justified in demanding excise duty on the said product, especially when it is nobody's case that this intermediary product is used or sold by the petitioners in the market. 8. In the result, this Writ Petition is accepted and the impugned notices Annexures 'P1', 'P3', issued to petitioner No. 1 and similar notices is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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