9911796707
TMI Blog1990 (4) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... tion cloth'. The preparation of the friction cloth involves application of rubber compound to the cotton fabrics. It seems, the petitioner-company purchased grey cotton sheeting's falling under Central Excise Tariff Item No. 19 I(a) which is coated with rubber compound and which, after a continuous process, ultimately takes shape as fan belts and V-belts. The contention of the petitioner-company is that at no stage in the manufacturing process, goods, as known in common trade parlance, emerge in the factory. In other words, the end product, which is exigible as rubber beltings, will be in a continuous and uninterrupted process in which grey fabrics undergo application of rubber compound when fed in a calendering machine. The petitioner-company has been paying duty on the ultimate goods, known in the market as 'rubber beltings'. The sticky material, styled as "friction cloth", has no commercial characteristic and is not known in the market as such. The petitioner-company says that there is reason to believe that a similar view has been taken by the Chief Chemist of the respondents' department as early as in 1984 in connection with certain doubts raised in the matter of eligibility o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised friction cloth was not generally marketed but was captively used in the manufacture of other finished goods. It would be in the fitness of things to reproduce hereunder the operative part of the impugned order, which is in the following lines: "The contention of the assessee, that as there is no reference to 'rubberising' in the main tariff description (definition) of Item 19 of Central Excise Tariff, it would not be correct to include rubberised fabrics under Item 19 I (b), is not tenable inasmuch as the definition of manufacture under Section 2 (f) (v) of Central Excises Salt Act, 1944 specifically describes that 'rubberising' forms one of the processes mentioned under Item 19-1 of the Tariff as a process of manufacture. As such, the main description of them 19, defining cotton fabrics to mean "fabrics manufactured either wholly or partly from cotton" read with definition of manufacture under Section 2 (f) (v) of Central Excises Salt Act, 1944, brings in such rubberised fabrics within the ambit of Item 19 of the Central Excise Tariff. In view of the fact that 'manufacture' in relation to goods comprised in Item No. 19 of Central Excise Tariff includes several processes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are Paras 3 4). "3. The Directorate of Inspection have recommended that Rubberised Friction Cloth is not generally marketed but captively used in the manufacture of finished products, except in stray cases on charges for job work done. In view of the different High Court judgments which do not tie up durability of the product to the criterion of saleability and in the context of amendment to Item 19, (the Cotton Fabrics subject to process of rubberising having been included the friction cloth could be classified under T.I. 19-I(b). 4. The Board has accepted the suggestion to the effect that such goods would be correctly classifiable under 19-I(b). A model Trade Notice is appended 5. We would like to analyse the various components of the above said order which will show that the order is based upon certain basic conceptions held by the authorities which will have to be tested in the light of the latest Supreme Court decisions pronounced in the matter. It is undoubtedly conceded in the impugned order that the rubberised friction-cloth is not generally marketed but it is captively used in the manufacture of other finished goods only. Further more, it is also clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Appellate Collector of Central Excise - 1987 (31) E.L.T. 671 (BOM) upholding the principle that intermediate product which is not marketable is not liable to excise duty. In this case also the very question of dutiability of the cotton fabrics rubberised in the manufacture of V. Link belting was under consideration. Indentical views have been expressed by the courts in Diamond Rubber Mills v. Superintendent, Central Excise — 1985 (21) E.L.T. 646 (All.) and Punjab Rubber and Allied Industries and Others v. Union of India — 1983 (12) E.L.T. 54 (P H) and in an unreported decision of the High Court of Bombay in Misc. Petition No. 401 of 1963 dated 10-3-1966. In all the above cases the question of dutiability of friction cloth is involved and it is uniformly held that such an intermediary process in the manufacture of fan belts or V. belts, as the case may be, does not attract any excise duty. 8. Furthermore, in our opinion the controversy is now laid to rest in the light of the following Supreme Court decisions laying down certain basic principles to be followed to assess the dutiability of goods for the purposes of central excise. In Bhor Industries Ltd. v. Collector of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even during the said short period. 9. The impugned order has been passed under a mistaken notion that the pronouncements of the various High Courts do not tie up dutiability of the product to the criterion of saleability and in this view of the matter the friction-cloth attracts tariff under Item No. 191(b) of the Schedule of the Central Excise Tariff. However, with the pronouncements of the Supreme Court, referred to above, the controversy has been laid to rest and it is clearly held that the marketability or saleability of a product is an essential ingredient which can render it dutiable for payment of excise duty under the Act or the Rules, as the case may be. It is pertinent to note that in the impugned order it is clearly stated that the rubberised friction cloth is not generally marketed but captively used in the manufacture of other finished goods. If the product in question is not generally marketed and is not known in the market as a product by itself which can be bought or sold across the counter in the open market then it does not come within the category of 'goods' as envisaged under Section 3 of the Central Excise Act. There is no denial of the fact alleged by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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