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TMI Blog1989 (1) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi (hereinafter referred as 'the Tribunal'). The question involved is whether the crude PVC films is dutiable. The appellant is, inter alia, a manufacturer of crude PVC films for the purpose of use in final products such as leather cloth and laminate jute mattings and PVC tapes - both insulation and adhesive. The said crude PVC films are manufactured by the appellant in a continuous process in the factory premises of the appellant which are licensed premises under the Act. The appellant filed classification list No. XIV/75 dated 20th November, 1975 in respect of crude PVC films used for lamination with jute and for tapes claiming that the PVC films were non-excisable on the ground that the same were non-marketable intermediate products used exclusively for captive consumption. The said classification was approved by the Assistant Collector, Central Excise on 9th December, 1977. 2. There was an order passed by the Appellate Collector on 14th June, 1974 holding that crude PVC films were not marketable and were not liable to excise duty. It is necessary to refer to the Tariff Entry involved in this case. Tariff Item 15A(2) of the Central Excise Tariff reads as follows :- "Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to make these sheets marketable are not carried out in the case of crude PVC sheets which are used by the appellants in their factory for the manufacture of leather cloth... " The Appellate Collector further held in the said order that from the technical point of view, crude PVC sheets are different from marketable PVC sheets inasmuch as the tensile strength of crude PVC sheets is much lower than t hat of marketable PVC sheets. He further held that :- "This is so because marketable PVC sheets are passed through the calender at very high temperature and at a slow speed to that gelation, curing fusion takes place while in the case of crude PVC sheets, the same are passed through the calender at very fast speed and lower temperature with the result that gelation fusion in the course of heating and ageing is not formed resulting in lower tensile strength. When these crude PVC sheets are coated with textile fabrics, the two layers are passed through the rollers at slow speed and at high temperature and it is only at this stage that the GEL is properly formed and resin particles become swollen by diffusion of plasticizer into them that they touch each other. As heating progress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an attempt is being made to somehow bring the product under excise duty." There was an order passed on 16th February, 1978 by the Assistant Collector confirming the Show Cause Notice. On 10th October, 1979, an appeal was preferred by the appellant against the order of the Assistant Collector dated 16th February, 1978 which was rejected by the Appellate Collector of Central Excise. On 6th February, 1980 a revision application was preferred by the appellant to the Joint Secretary, Government of India. That was transferred to the Tribunal and by the impugned order, the Tribunal has rejected the appeal under challenge. 4. The Tribunal in the order has set out the contentions and observed that the question for determination was whether crude PVC film fell for classification under Item 15A(2) of the Central Excise Tariff or not. A submission was made that the Appellate Collector had held that the crude PVC sheets were not marketable and had not acquired the character and status of PVC films as known to the market. It was contended on behalf of the appellant that only marketable PVC film would fall within the said item. On the other hand, the Department's contention was that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resulted in production 'of goods as known in the market'. (emphasis supplied). In that case, the respondents, who were manufacturers of vegetable products known as Vanaspati, were assessed to excise duty under Item 23 of the First Schedule to the Central Excises and Salt Act, 1944, on what the taxing authorities called the manufacture of 'refined oil' from raw oil which according to them fell within the description of "vegetable non-essential oils, all sorts, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power". The common case made by the respondents in their petition under Article 226 of the Constitution challenging the imposition was that for the purpose of manufacturing Vanaspati they purchased groundnut and til oil from the market and subjected them to different processes before applying hydrogenation to produce Vanaspati and that nothing that they produced at any stage was covered by that item. Affidavits by experts were filed by both the parties and the High Court found in favour of the respondents and allowed the petitions. The Union of India appealed. It was urged on its behalf before this Court that before finally produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India Ors. - 1978 (2) E.L.T. (J 336) = (1968) 3 SCR 21, where this court held that the gas generated by the appellant companies in that case was kiln gas and not carbon dioxide as known to the market i.e., to those who deal in it or who use it. Therefore, the kiln gas in question is neither carbon dioxide nor compressed carbon dioxide known as such to the commercial community and could not attract duty under Item 14-H of the First Schedule. It was held by this Court that the duty being on the manufacture and not on the sale, the mere fact that kiln gas generated by those concerns was not actually sold did not make any difference if what they generated and used in their manufacturing process was carbon dioxide. Justice Shelat speaking for the Court at page 31 of the report observed :- "The Act charges duty on manufacture of goods. The word "manufacture" implies a change but every change in the 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the report that excise duty was primarily a duty on the production or manufacture of goods produced or manufactured within the country. This Court again In Re The Bill to Amend Section 20 of the Sea Customs Act, 1878, and Section 3 of the Central Excises and Salt Act, 1944 [1964 (3) SCR 787] at page 822 of the report referring to the aforesaid observations of the Judicial Committee reiterated that taxable event in the case of duties of excises is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. Therefore, the essential ingredient is that there should be manufacture of goods. The goods being articles which are known to those who are dealing in the market having their identity as such. Section 3 of the Act enjoins that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or 'manufactured' in India. "Excisable goods" under Section 2(d) of the Act means goods specified in the Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt. Therefore, it is necessary, in a case like this, to find out wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reduced to the desired width, thickness etc. The temperature at which PVC sheets which are marketed as such are passed through the calender is about 178oC (330 - 350o) and the speed of the roller is adjusted accordingly. The speed of the roller and the temperature at which the sheets are passed through the calender are important factors in order to achieve the minimum standard of tensile strength of the sheets. Gelation, i.e., the change of the state from the liquid to the solid condition that occurs during the heating and/or ageing, when the plasticizer has been absorbed by the resin to an extent resulting in a dry but weak and crumbly mass, and thereafter within normal proportions of resin and plasticizer, this state is attained when the resin particles have become so swollen by diffusion of plasticizer into them that they touch each other, is an important process in the case of PVC sheets which are marketed as such. As heating progresses the swollen particles begin to weld together, resulting in some degree of strength. After the GEL is formed in such PVC sheets and resins get fused with plasticizer, they are further subjected to the processing of finishing, embossing/printing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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