Customs, Excise and Gold Tribunal - Delhi
Caprihans India Ltd. vs Collector Of Central Excise on 25 May, 1995
Equivalent citations: 1996(85)ELT315(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. This appeal is directed against the order dated 12-8-1986 passed by the Collector of Central Excise (Appeals), Bombay. The facts, briefly, are that the appellants, inter alia, are the manufacturers of textile fabrics impregnated, coated or laminated with artificial plastic materials falling under the erstwhile tariff items 19 (iii) and 22(3) of 1st Schedule to the then Central Excise Tariff.
2. The impregnated, coated or laminated fabrics based on cotton fabrics or man-made fabrics (popularly known as Leather Cloth) are further subjected to the process of design printing wherever required. The initial duty liability under Tariff Items 19(iii) and 22(3) has been discharged and the dispute is as regards dutiability on process of printing done on such Leather Cloth. The Assistant Collector as well as Collector (Appeals) treated the process of printing as a process incidental or ancillary to the process of manufacture product, and held that the impregnated /processed cloth if cleared after printing then duty will be again charged accordingly under item 19(iii) or 22(3).
When the matter was called, none was present for the appellants, who have stated in their letter dated 3-3-1995 that they do not desire to be heard in person and have sent written submissions. They have mainly argued that Sub-clauses (v) and (vii) of Section 2(f) of the Central Excises & Salt Act, 1944 defining the term 'manufacture' covered only goods which fall under Tariff Items 19-I and 22 (1) of the Central Excise Tariff laying down the process which would amount to manufacture in respect of goods falling under these two items of the tariff only. Tariff Items 19 (iii) and 22(3) are excluded from the purview of the definition of manufacture. In other words, process of printing under Item 19 (iii) or 22(3) are not at all covered by Section 2(f). They have also contended that mere process of printing does not transform such leather cloth into different and distinct commercial commodity so as to constitute manufacture under Section 2(f). He also relied upon the Tribunal's decision in the case of Richardson & Guddas reported in 1988 (38) E.L.T. 76 based on the decision of the Supreme Court in the case of Empire Industries Ltd. & Ors. v. Union of India & Ors. reported in 1985 (20) E.L.T. 178 (S.C). Their further contention is that the plain laminated fabrics themselves are finished goods and known in the market as such. Therefore, printing or embossing does not change the character or use of the goods. Therefore, no further duty can be levied on these goods because of the printing or embossing. They have, further, contended that since the goods as PVC Leather Cloth are already marketed as such, the other processes cannot be regarded as ancillary or incidental to the completion of the manufacture of the product PVC Leather Cloth. Yet another plea of the appellants is that as the PVC Leather Cloth has already discharged duty liability under Item 19 (iii) or 22 (3), it cannot again be subjected to duty under the same item.
3. Shri Mohan Lal, ld. J.D.R. contended that the process of printing and embossing on the PVC Leather Cloth would clearly be in the nature of the process incidental or ancillary to the completion of the manufacture of the embossed leather cloth. He relied upon the Supreme Court judgment in the case of Moti Laminates v. C.C.E. - 1995 (76) E.L.T. 241 (SC) wherein it has been held that even intermediate product which are marketable, have to suffer duty. Here, the embossed fabric is, admittedly, marketable and the ld. D.R. in this context also relied upon the case law reported in 1985 (22) E.L.T. 943 in the case of Satyanarayan Manohar Lal v. Collector of Central Excise, Kanpur.
4. We have carefully perused the appeal memorandum, the written submissions and have considered the arguments put-forth by ld. D.R. In the present case, the impregnated, coated or laminated fabrics based on cotton fabrics or manmade textiles falling under items 19 (iii) and 22(3) Central Excise Tariff are further subjected to printing, embossing or designing. The appellants say that the plain laminated fabrics are themselves finished marketable goods on which duty liability is to be discharged and that the product at that stage is known in the market as leather cloth and that printing or embossing does not change the character or use of the goods and hence no further duty is payable thereon. The appellants, have, further, contended that Sub-clause (v) and (vii) to Section 2(f) of CES Act, 1944 defining "manufacture" listing processes like bleaching mercerising, dyeing, printing etc. as processes of manufacture, are only applicable to tariff items 19 (iii) and 22(1) and are not applicable to T.I. 19 iii and 22(3) CET. Another argument is that since plain PVC leather cloth has fully discharged the duty liability under item 19 (iii) and 22(3), it cannot again be subjected to duty under the same tariff item for the process of printing. Examining these contentions, it is seen that the definition of manufacture under Section 2(f) of Central Excises & Salt Act, 1944 (as it stood at the relevant time) is an inclusive definition which says, "manufacture includes any process incidental or ancillary to the completion of a manufactured product" and goes on to list certain specific processes which will amount to manufacture in respect of certain items in the tariff. The appellants, while heavily relying upon the Sub-clauses (v) and (vii) thereto which cover only goods falling under item 19I and 22 (1), are overlooking the main definition. The definition covers processes incidental and ancillary to the completion of the manufactured product. Here, we have clearly two products, both of which are admittedly marketable. One is the plain laminated product. The other is the printed/embossed product, which product becomes completely manufactured only after the process of printing and embossing is carried out thereupon. The further processes of printing/embossing go to enhance the inherent value of the product and its marketability.
5. The position in cases such as this as to the nature of processes ancillary or incidental to the completion of the manufactured product is illustrated in the case of Vallabh Glass Works v. Union of India 1980 E.L.T. 437. Therein, in respect of sheet glass (for which there was a separate market) some customers required that a grinding process should be applied at the manufacturer's factory. Similarly, some customers required holes to be bored through the sheet glass. It was held that though glass sheets without grinding and hole making processes are marketable, nevertheless, if in the factory itself grinding and hole making processes are applied at the request of the customers, the latter processes become part of the manufacturer's process of making ground and bored glass sheets.
6. Hence, the conclusion of the lower authority that printing and embossing are incidental/ancillary processes to the completion of the manufactured product, namely, printed, laminated fabrics is well-founded. As for their other argument that laminated fabrics having discharged duty cover under item 19 (iii) or 22(3) cannot be subjected to duty again, it may be observed that a similar argument had been repelled by the Supreme Court in the case of Laminated Packings v. Collector of Central Excise - 1990 (49) E.L.T. 326 (SC). The Supreme Court observed, "Counsel for the appellant sought to contend that the kraft paper was duty paid goods and there was no change is the essential characteristic or use of the paper after lamination. The fact that duty has been duty paid on the kraft paper is irrelevant for the consideration of the issue before us. If duty has been paid, then benefit or credit for the duty paid would be available to the appellant under Rule 56A of Central Excise Rules, 1944.
7. 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...." Therefore, the appellants' contention on this aspect in the present appeal is unacceptable. In the result, we see no reason to interfere with the impugned order and the appeal is, therefore, rejected.