9911796707
TMI Blog1985 (4) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-1(1) of Schedule 1 to the Act. The petitioner was required to show cause why necessary demand may not be raised against it accordingly. The petitioner filed a reply dated 4-11-1972 to that notice a copy whereof has been filed as Annexure 2 to the writ petition in which it was asserted that the petitioner was a manufacturer of Rubber belting and used canvas and rubber as raw materials to achieve the product namely rubber belting. The process of manufacture was also indicated in the said reply. The plea of the petitioner was accepted by the Assistant Collector, Central Excise, Aligarh, by his order dated 3-3-1978 and the demand raised by the Superintendent, Central Excise, was dropped. A copy of this order has been attached as Annexure 3 to the Writ Petition. 2. According to the petitioner the Superintendent, Central Excise, thereafter kept quiet for nearly seven years. He, however, served a fresh notice dated 13/14-2-1985 asserting that what the petitioner was manufacturing was rubberised cotton fabrics (Intermediary product) falling under Tariff Item No. 19-I(b) of Schedule 1 to the Act. The petitioner was required to show cause as to why the amount mentioned in the said notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise, Aligarh, by his order dated 3-3-1978 and the case of the petitioner that the goods manufactured by it fell under Tariff Item No. 16-A(4) was accepted the Superintendent, Central Excise, had no jurisdiction to issue the impugned notice and pass the impugned detention order. It was further asserted that the impugned notice and detention order were without jurisdiction also on the ground that they were barred by time. 6. Counsel appearing for the respondents has, on the other hand, urged that in view of the insertion of Sub-clause (v) in the definition of the term "manufacture" contained in Clause (f) of Section 2 of the Act by Act No. 6 of 1980, with effect from 24-11-1979 as also the amendment made in Rules 9 and 49 of the Excise Rules, 1944, by the Central Excise (4th Amendment) Rules, 1982, [vide Notification No. 20/82-CE, dated 20-2-1982] the goods manufactured by the petitioner which are subsequently cat into pieces to give them the shape of belts are Rubberised Cotton Fabrics liable to excise duty under Tariff Item No. 19-I(b) of Schedule 1 to the Act and the mere fact that the vulcanised sheets constituted intermediary product in the sense that they came into bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity, whether in a continuous process or otherwise, in such place or any premises appurtenant thereto specified by the Collector under Sub-rule (1) shall be deemed to have been removed from such place or premises immediately before such consumption or utilisation." 3. In rule 49 of the said rules, the following Explanation shall be inserted at the end, namely : "Explanation - For the purposes of this rule, excisable goods made in a factory and consumed or utilised - (i) as such or after subjection to any process or processes; or (ii) for the manufacture of any other commodity, Whether in a continuous process or otherwise, in such factory or place or premises specified under rule 9 or store-room or other place of storage approved by the collector under rule 47, shall be deemed to have been issued out of, or removed from such factory, place, premises, store-room or other place of storage, as the case may be, immediately before such consumption or utilisation." 9. The case of the petitioner is that vulcanised sheets which the respondents call as Rubberised Cotton Fabrics (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. The duty is levied on goods. As the Act does not define goods, the legislature must be taken to have used that word in its ordinary dictionary meaning. The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market. That it would be such an article which would attract the Act was brought out in Union of India v. Delhi Cloth and General Mills Ltd., 1963 Supp (1) SCR 586 (AIR 1963 S.C. 791)." 11. In the case of Flocks (India) Private Limited (supra) it was held by a Division Bench of this Court that the excise duty is payable only on manufacture of goods which are per se marketable. So long as such marketable goods have not come into existence no question of paying any central excise duty in respect thereof can possibly arise. 12. In the case of Punjab Rubber and Allied Industries and Others (supra) the petitioner was manufacturing almost similar goods by adopting the same manufacturing process and a similar plea was raised on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of manufacturing of transmission or V shaped belts, etc., has not been expressly and in clear terms made subject to excise duty. This friction cloth which is an intermediary product produced during the process of manufacture of the above-mentioned articles is not sold or purchased in the market. This fact has been averred in the writ petition and the same has not been denied in the written statement. In reply to paragraph 15 of the Writ petition, it is mentioned that the so-called friction cloth although it is an intermediary product for transmission belting, but in itself it is excisable product and Central Excise is leviable even if the goods are not. marketable, but are meant for captive use, being used for manufacture of other goods. This stand of the revenue is directly in conflict with the law settled by the Final Court, in Union of India and another v. Delhi Cloth and General Mills Co. Ltd., etc. - AIR 1963 SC 791 = 1977 E.L.T. (J 199). After considering the meaning of word "goods" it has been held in paragraph 17 that these definitions make it clear that to become goods an article must be something which can ordinarily come to the market to be bought and sold. In this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Ltd. (1978 Excise Law Times 1) where it was held that "the test of general marketability does not appear sound. It would fail in a monopoly product. For such a product, the relevant entry would become nugatory". In the case the question which came up for consideration was as to whether the aluminium cans or torch bodies which were an intermediate product in the process of manufacture of torches were goods contemplated by the Act. After making the aforesaid observation relied on by counsel for the respondents the Bench further held :- "Assuming, however, that the product must be known to the trade as such, before it can be goods within the meaning of the Act, we are satisfied that the aluminium cans or torch bodies are such a product...... This transaction would show that the aluminium cans are known and dealt with as an entity by itself, are marketable according to the needs of those who dealt it. The fact that these cans have a very limited and specialised market would make no impact on the legal position." This case is clearly distinguishable on facts because in the instant case it is not even the respondents' case that the vulcanised sheets which they call as Rubberised Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words for expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer, after taking into considerations the material placed on record in this behalf it was held that, by and large, a tyre cord fabric is regarded as a textile fabric. This case is obviously distinguishable on the facts of the instant case. 17. Reliance was also placed by counsel for the respondents on the decision of a Division Bench of the Delhi High Court in Hyderabad Asbestos Cement Products Ltd. and another v. Union of India and others (1980 Excise Law Times 735) where it was held that if the legislature has treated a process of an article to be a `manufacture' it is not open to contend that the process is not manufacture. Apparently, no exception can be taken to this view. It was, however, further held in that case that it is now settled law that before excise duty can be levied, the goods brought into existence must be the goods which can be bought and sold in the market. Asbestos fibre which was the goods in question in that case was held to be a marketable commodity saleable as such. 18. Lastly, reliance was placed by counsel for the respondents on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) is apparently applicable, where the test of goods being marketable as laid down by the Supreme Court in the case of S.B. Sugar Mills Ltd. (supra) was applied even after Rules 9 and 49 of the Excise Rules being amended by the Central Excise (4th Amendment) Rules, 1982. 21. Further, even if for the sake of argument the test of the goods being marketable is held not to be applicable as urged by counsel for the respondents in regard to the vulcanised sheets which are called by the respondents as Rubberised Cotton Fabrics (Intermediary product) the question is as under which tariff item excise duty is payable on this intermediary product. Tariff Item 19 dealing with Cotton Fabrics is of a general nature and may also include within its sweep the vulcanised sheets referred to above in the category of cotton fabrics subjected to the process of rubberising if the submission made by counsel for the respondents is accepted. But in view of the dictionary meaning of the word "belting" used in Tariff Item 16-A(4) and its composition as enumerated at Serial No. 22 of the Table at page 150 (182) of the Central Excise Manual, Volume I (eleventh edition) quoted above the vulcanised sheets ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
