Full Judgment
2. Shri B.P.R. Sarcar, Deputy General Manager representing the assessee has stated that the issue has been decided by the Tribunal in its Order No. 4 and 5/86-C, dated 6-2-1986 vis-a-vis the same assessee. In that order it has been held that the product under consideration, namely coloured polystyrene compound would fall under Tariff Item 15-A(1)(ii) and not under Tariff Item 68. It has also been held that duty on the coloured polystyrene compound would be paid at the time of removal of the said goods from the factory on the value applicable to the coloured compounds. Learned Representative has, therefore, stated that while he agrees with the classification held by the Tribunal in the aforesaid order-in-appeal he has some arguments against other findings of the Tribunal that the duty should be paid on the value of the coloured compounds when they are removed from the factory and not on the value of uncoloured polystyrene compounds when they are taken to the colouring section. In support of his plea learned Representative has cited the following judgments :- 3. Learned JDR, on the other hand has stated that the Tribunal's Order No. 4 and 5, dated 6-1-1986 covers the cases under consideration in entirety and that order be made applicable to the cases under consideration.
4. We have carefully considered the pleas advanced on both sides. We are inclined to agree with the learned JDR. Plea raised by the learned Representative for the assessee regarding chargeability of duty on the value of uncoloured polystyrene compound does not hold good on the basis of the citations made by him. Hon'ble Supreme Court's judgments is a case in respect of Sales Tax and in respect of Central Excise Law.
The decision in the case of Sales Tax is not relevant because of the peculiar provisions of Central Excise Law particularly that of Rule 9 as we shall discuss a little later. The other three judgments passed by the Tribunal and relied upon by the learned Representative of the assessee are of no avail because the facts in those cases are different from the facts in this case. In those cases the duty paid goods were purchased by the manufacturer and thereafter some processing was carried out which did not result into any new product. In the instant case the assessee is using uncoloured polystyrene by way of captive consumption in his own factory for the purpose of colouring them. No duty is, therefore, required to be paid at the uncoloured stage in view of the clear provisions of Rule 9 of the Cental Excise Rules. Under the terms of that rule the duty is required to be paid when the goods are removed from the factory for consumption or for export or for manufacture of any other commodity in or outside such place. Uncoloured polystyrene for the purpose of colouring in the same factory cannot be said to have been removed for the purpose of manufacture of any other commodity as has already been held by the Tribunal in its Order No. 4 and 5 dated 6-1-1986 that no new commodity comes into existence by way of colouring of the uncoloured polystyrene. This position is made amply clear by explanation to Rule 9 which states that the excisable goods utilised as such or after subjection to any process or processes shall be deemed to have been removed from such place of premises immediately before such consumption or utilisation. In the instant case processing of colouring has been done on the uncoloured polystyrene. Therefore, it is the fact of removal of the goods after such process of colouring (without resulting into another commodity) which would attract liability to duty. The goods are, therefore, liable to duty only at the coloured stage and if they are so removed from the factory. Learned Representative's plea that duty in the instant case has already been paid once at the uncoloured stage is of no consequence because that was paid under the contention of the department that duty at the coloured stage was leviable under a separate Tariff Item 68 of the CET and therefore, the department had perhaps demanded duty earlier at the uncoloured stage as well under Item 15-A. In any case, any wrong practice adopted by the department in the face of provisions of Rule 9 cannot confer any benefit to the assessee. We, therefore, hold in line with the Tribunal's earlier Order No. 4 and 5 dated 6-1-1986 that the goods would be classified under Item 15-A(1)(ii) and the duty on the coloured polystyrene compound would be charged at the time of removal of those goods on the value of coloured compound subject to limitation of 6 months as already held in the aforesaid order.