Full Judgment
2. The appellants have submitted that they are manufacturers of plastic containers for use in Industries for storage, handling etc. for alkalies, chemicals, food stuffs, fabrics, drugs etc. Such plastic containers are placed on mild steel trolleys and sold to various customers. The advantage in placing on the trolleys is that loaded plastic containers can be moved easily by manually pulling the trolleys from place to place. The MS Trolleys are purchased from outside. The appellants manufactured only the plastic containers. These containers are placed on the trolleys only to facilitate the movement of plastic containers. Trolley is not a fixed part of the container. The plastic containers can be used without the trolleys. They have submitted that there is no manufacture involved in placing the containers on the trolleys and handing it over to the purchasers. They have, therefore, submitted that they are manufacturing only plastic containers which are exempt. The appellants have also submitted that the Assistant Collector of Central Excise had examined this case in 1983 and held in his Order No. 21 of 83, dated 4-3-1983 that the appellants are only manufacturing plastic containers falling under Tariff Item 15A(2) and not a different item called processing trolleys classifiable under Tariff Item 68. They have submitted that the entire demand is time barred as the notice had been issued beyond six months. They have also submitted that as the matter was fully in the knowledge of the Department and the Assistant Collector had held in his adjudication order that the appellants were manufacturing only plastic containers, the allegation of suppression of facts (which justifies invoking of longer period) is without basis and the demand is liable to be set aside as time barred. They have also submitted that the huge penalty imposed is entirely without any justification.
3. Learned Senior Departmental Representative, Shri D.S. Negi, while justifying the findings, in the adjudication order, has submitted that the mounting of the container on the trolley amounts to manufacture as a new product with a new nomenclature (from plastic container to plastic trolley) comes into existence. He also drew specific attention to the finding in the adjudication order that the trade recognises the product under an entirely different nomenclature after the mounting of the plastic container on the trolleys. The character and use of the trolley also changes on such assembly. He also submitted that it is not of any consequence that the process involved in mounting the plastic container on the trolley is rather simple. The question to ask in relation to manufacture is whether a new product is coming into existence and not, whether the processes involved are simple or complex. He also contended that the extended period has been correctly invoked as the goods were not declared as trolley in the classification list.
4. We have perused the records and have considered the rival submissions. We find that the appellants have been manufacturing plastic containers of various sizes. These are all for the storage of items like fabrics, drugs chemicals etc. These containers are placed on trolleys for the purpose of making movement from one place to another easy. We find that the plastic containers are merely placed on the trolleys. The trolley and the containers do not merge into a new product. The container can be placed and removed from the trolley without any dismantling process. The character of the container also undergoes no change. It is for storage of materials whether placed on a trolley or not. The containers are also sold with or without the trolleys. In the circumstances, we are of the view that the appellants are only manufacturing plastic containers and they are not manufacturing trailers and semi-trailers as classifiable under 87.16.
It is also clear that this matter was fully in the knowledge of the Department as evidenced by the 1983 adjudication order of the Assistant Collector. Therefore, the allegation of suppression of facts is also not correct and justified. In view of these findings, we also hold that the imposition of penalty was unwarranted. The appeal succeeds and is allowed with consequential relief to the appellants and the impugned order is set aside.