Deciding Authority: The Supreme Court of India
Name of the Judges: Santosh Hegde & Shivaraj V. Patil
Date of Judgement: 30/04/2002
Facts:
The Assistant Collector of Central Excise had made a demand on the respondent for clandestine clearance of bed-sheets, bed spreads etc. The said demand was confirmed by the Commissioner of Central Excise along with the demand made for wrongful availment of benefits under Notification dated 1.3.1983 for the period 1983-85 as also the order of seizure of goods with an option to the respondent to redeem the same, if it so desired, on payment of a redemption fine with a further direction to pay a penalty of Rs.25 lacs. Against the said order, the respondent preferred an appeal before the Customs, Excise & Gold (Control) Appellate Tribunal (for short ’the tribunal’) which by its order dated 3.8.1998 allowed the said appeal. Being aggrieved by the said order, the Revenue has preferred this appeal before this Court.
Judgement:
The pertinent question, therefore, is : whether such new article is exigible to duty under Tariff Item 19(I) or not ? The tribunal has held that since the raw-material has already suffered a duty under a particular tariff item, namely, Tariff Item 19(I), the product manufactured by such material, is not exigible to levy of duty. In this Court’s opinion, this view of the tribunal is not correct. This Court in the case of Laminated Packings (P) Ltd. v. Collector of C. Ex. (1990 [49] ELT 326 SC), in a similar situation, had held thus : “the further contention urged on behalf of the appellant that the goods belong to the same entry is also not relevant because even if the goods belong to the same entry, the goods are different identifiable goods, known as such in the market. If that is so, the manufacture occurs and if manufacture takes place, it is dutiable. ’Manufacture’ is bringing into being goods as known in the excise laws, that is to say, known in the market having distinct, separate and identifiable function. On this score, in this Court’s opinion, there is sufficient evidence. If that is the position, then the appellant was liable to pay duty.” It is evident from the above that the mere fact that the material from which the new goods are manufactured, has suffered a duty under a particular tariff item that does not exclude the finished product from being exigible to fresh duty if the Tariff Act provides for it. In the instant case, though the cotton fabric had suffered duty under Tariff Item 19(I), the Tariff Act has made bed sheets, pillow covers etc. also dutiable under the very same tariff item, therefore, the respondent is liable to pay duty on bed sheets, pillow covers, napkins etc. manufactured by it.
Decision:
The appeal is allowed.
Sudipta Bhowmick, 4th Year, KIIT School of Law.
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