9911796707
TMI Blog1983 (12) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide an opposite backdrop to delineate the legal issue. 3. The petitioners are manufacturers and dealers of T.R. belting, V-shaped and conveyor belts. In order to manufacture these goods, the raw rubber, both natural and synthetic is compounded with various chemicals to make a master batch which is in the form of a sheet. This sheet is like a soft paste and is used in various forms in making a cushion compound, in impregnation or ply lamination. For the manufacture of the flat transmission belts the selected grade of cotton canvas is impregnated with the rubber paste in different consistency by Rolling the Paste in the fabric under pressure on a Calender Machine. The fabric thus impregnated with the rubber paste forms a ply inter-layer. The fabric thus treated-impregnated with the rubber paste is piled into layers to give a requisite thickness. While preparing this pile the thin sheet of rubber compound as described above is placed as inter-layers. The pile thus formed in required thickness is steam-heated in Hydraulic Press to heat cure. The piled curd sheets of laminated piles are cut to size for ultimate conversion into flat transmission belts. 4. The process of manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners shall become liable to penal action under the Central Excise Law. On receipt of this notice, Punjab Rubber Belting Manufacturing Association sent a reply to the Superintendent, Central Excise respondent No. 4 and copies of this reply were also endorsed to the Assistant Collector — respondent No. 3 and Chairman, Central Board of Excise Customs, Government of India. The petitioners submitted that they were not manufacturing friction cloth/rubberised fabrics falling under Item 19-1(b) of the 1st Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as `the Act') and as such they were under no obligation to obtain Central Excise Licence and pay excise duty under the said item. It was pointed out that the Punjab and Haryana High Court had already held that the so-called Friction Cloth does not attract the Central Excise Duty under Tariff Item No. 19-1(b). They requested for the withdrawal of the notices. 6. The Superintendent, Central Excise along with four Inspectors visited the premises of one of the petitioner — M/s. Deluxe Rubber Industries, Tanda Road, Jullundur on March 17, 1982 at about 4 P.M. and detained the goods. The other petitioners also appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate set forth in the First Schedule." "Item 19-1(b) of the Central Excise Tariff of India : Item No. Description of goods Rate of duty Basic duty Addl. duty Handloom cess 19-1(b) Cotton fabrics, subjected to the process of bleaching, mercerising, dyeing, printing, water-proofing, rubberising, shrink proofing, organdie processing or any other process or any two or more of these processes. Twenty per cent ad valorem . Fiveper cent ad valorem. 1.9 paise per Sq.M. "Rule 9 of the Central Excise Rules, 1944. - No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export, or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these rules or as the Collector may require and except on presentation of an application in the proper form and on obtaining the permission of the proper officer on the form : Provided - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market. The result of this decision was that in the process of manufacture of cotton fabrics, if any article came into being at an intermediary stage, the same could not be held to be exigible to excise duty. The same very view had been taken in some other High Courts also. It seems to take away the effect of these decisions, Rules 9 and 49 of the Rules were amended and explanations to both these rules have been added in 1982. The effect of these two explanations is that the excisable goods produced, cured or manufactured at any place and consumed or utilised as such or after subjection to any process or for manufacture of any other commodity whether in continuous process or otherwise shall be deemed to have been removed from such place or premises and such goods shall be liable to pay excise duty even if they had not actually been removed from the place of their manufacture, processing etc. under a pure legal fiction. Under Section 2(d) of the Act, excisable goods have been defined to be goods specified in First Schedule as being subject to a duty of excise. It is provided in Section 3 of the Act that excise duty on all excisable goods which are manufactured in India shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the market. Since the so-called friction cloth sought to be made excisable is only an intermediary produce and is used captively for further manufacture of transmission belting V-shaped belts or conveyor belts and is not known to the trade and is not bought or sold as such, it cannot be termed to be goods as contemplated in Section 3 of the Act. Since this intermediary product is not an excisable article in itself, the amendments by way of explanations introduced in Rules 9 and 49 of the Rules do not change the situation. These two explanations only make those intermediary articles liable to excise duty which independently fall within the definition of any of the entries in the First Schedule. Previously, they could be made subject to excise duty only, if they were not used in a composite, continuous and interrupted process for the manufacture of any other excisable article and were removed from the premises within the meaning of the term as used in Rules 9 and 49 of the Rules. In the present case the question of removal is not relevant because the so-called friction cloth or rubberised cotton fabrics do not fall within the definition of goods as envisaged in Section 3 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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