Judgment:
Bilal Nazki, J.
1. In this TRC there is only one question which is raised before us and the question is, whether a pre-recorded cassette can be taxed as a new product or it could be exempted as second sale. There are no disputes on facts. The assessing authority assessed it as first sale as a new product. Appeal filed by the assessee, was dismissed. Second appeal filed by the Department was, however, allowed. Therefore, this T.R.C. by the Department.
2. Whether a blank audio cassette is different than a recorded audio cassette or not, has drawn the attention of various Courts, though under different Acts on different occasions. The foremost judgment is the judgment of the Bombay High Court reported in Commissioner of Sales Tax, Maharashtra State, Bombay v. Rajshree Electronics, 1998 STC 403. A Division Bench of Bombay High Court held that a recorded cassette was not distinct and different from a blank cassette, as there was no process of manufacturing involved. Similarly in Prabhat Sound Studios v. Additional Collector of Central Excise, : 1996(88)ELT635(SC) , the Supreme Court held in Para 7 as under:
'The manufacturer of tapes may manufacture and sell blank tapes upon which the purchaser would be free to record such sound as he choose. The manufacturer may go one step forward and record sound itself and sell such tapes. It is to cover both eventualities that Tariff Item 59 is categorized as it is. But it is altogether different to say that by reason thereof the recording of sound on blank tapes, as done by the appellant on job-work basis, is a manufacturing process. As the Tribunal in M. Basheer Ahammed's case has rightly pointed out, even such a prerecorded tape can have the sound erased from it and it can be used again for recording other sound.'
3. Had this judgment of Supreme Court been the last judgment, there would have been no difficulty for us to accept the contention of the assessee, that recorded audio cassette was not a different product than a blank cassette. But the question again cropped up before the Supreme Court in a judgment in The Gramophone Company of India Ltd. v. The Collector of Customs, Calcutta, : 1999(114)ELT770(SC) . Though it was a case under the Customs Act, but the question of law was same as to whether recording of a cassette gives rise to a new product or not. Supreme Court noted that the Courts had consistently taken the view that the moment there is transformation into a new commodity commercially known and recognized as a distinct and separate commodity, it should be considered that manufacture has taken place. Supreme Court was of the view that recording of a blank cassette gives rise to a new product. This judgment is latest and is by a three-Judge Bench of the Supreme Court, whereas the earlier judgment is only by two Judges.
4. However, the learned Counsel for the petitioner submits that a judgment after the judgment in The Gramophone Company of India Ltd. v. The Collector of Customs, Calcutta (supra) has also been pronounced by the Supreme Court, which is also by three Judges, which was reported in Garware Plastics and Polyesters Ltd. v. Collector, 2002 (146) ELT A310. We have seen this judgment but this does not lay down any law. The judgment reads as under:
'Heard the learned Counsel for the parties. Learned Counsel appearing the Department fairly concedes that the matter is squarely covered against the Department by decision rendered by this Court in, Prabhat Sound Studios v. Additional Collector of Central Excise, : 1996(88)ELT635(SC) . Hence this appeal is allowed, impugned order passed by the CEGAT is set-aside. There shall be no order as to costs.'
This only shows that the Revenue had conceded that the controversy before the Court was covered by another judgment. The Supreme Court in this case, had no occasion to go into the correctness or otherwise of the judgment reported in Prabhat Sound Studios v. Additional Collector of Central Excise (supra).
5. For these reasons, we allow this TRC and set-aside the order of the Tribunal as it relates to the controversy discussed hereinabove. However, we confirm the finding of the first Appellate Authority with regard to the rate of tax. No costs.