Collector of Central Excise Vs. Sharp Packaging - Court Judgment

Excerpt:
1. the assessees in this case received duty paid tab seals falling under heading 8309. they further processed these goods making hole in each tab seal and inserting plastic washer. the finished washers were cleared by them on payment of duty. subsequently, they filed refund claim on the ground that the goods received by them were not completely manufactured goods and also that once the duty had been paid, the duty could not be demanded for the second time on any goods falling under the same sub-heading. the assistant collector held that the goods as were received by the assessees could not be called seals but were merely iron and steel products. they could be termed as seal only after insertion of plastic ring or washer. on the ground that conversion amounted to manufacture and duty was leviable once again, he rejected the claim for refund. the collector (appeals) in his order did not agree with the assistant collector that seals received by the assessees could not operate as seals until plastic ring or gaskets were inserted inside on the ground that the goods had already suffered duty under the same heading. he set aside the order of the assistant collector and ordered consequential refund resulting in the present appeal filed by the revenue.2. shri d.s. negi, departmental representative, relied upon the judgment of the supreme court in the case of laminated packings (p) ltd. 1990 (49) e.l.t. 326 (s.c.), wherein it was held that where "manufacture" was involved, the resultant products were again dutiable even if the base product and the resultant product were to fall under the same sub-heading. referring to the process of manufacture given in the lower heading, he claimed that seal with washer and seal without washer were goods known separately in the market although both were seals and both were covered under the same tariff item. it was his claim that operation of drilling and insertion of washer amounted to manufacture creating a new and distinct product. therefore, the duty for the second time was leviable. apart from merit, it was his claim that refund claim for rs. 2819.50 paise for the period 16-9-1986 to 23-12-1986 was barred by time.3. the respondents were not present although notice for hearing sent by post was duly acknowledged by them as having been received on 4-12-1997.4. we have carefully gone through the facts of the case and the arguments made before us.5. the ratio of the cited judgment of the supreme court was followed by the madras high court in their decision in the case of paper products limited - 1993 (68) e.l.t. 731 and thereafter by the tribunal in several cases including the case of c.c.e., patna v. hyderabad asbestos cement products limited - 1994 (72) e.l.t. 877. from the facts before us, there is no doubt that due to the process undertaken on the plain seal, the final product made by the assessee was a seal with washer and as such a commodity distinct from what the input was. in terms of the judgment cited since the process of manufacture was involved the duty was correctly charged once again. we, therfore, allow the 25/1023 appeal, set aside the impugned order and restore the order of the assistant collector.

Judgment:
1. The assessees in this case received duty paid tab seals falling under Heading 8309. They further processed these goods making hole in each tab seal and inserting plastic washer. The finished washers were cleared by them on payment of duty. Subsequently, they filed refund claim on the ground that the goods received by them were not completely manufactured goods and also that once the duty had been paid, the duty could not be demanded for the second time on any goods falling under the same sub-heading. The Assistant Collector held that the goods as were received by the assessees could not be called seals but were merely iron and steel products. They could be termed as seal only after insertion of plastic ring or washer. On the ground that conversion amounted to manufacture and duty was leviable once again, he rejected the claim for refund. The Collector (Appeals) in his order did not agree with the Assistant Collector that seals received by the assessees could not operate as seals until plastic ring or gaskets were inserted inside on the ground that the goods had already suffered duty under the same heading. He set aside the order of the Assistant Collector and ordered consequential refund resulting in the present appeal filed by the Revenue.

2. Shri D.S. Negi, Departmental Representative, relied upon the judgment of the Supreme Court in the case of Laminated Packings (P) Ltd. 1990 (49) E.L.T. 326 (S.C.), wherein it was held that where "manufacture" was involved, the resultant products were again dutiable even if the base product and the resultant product were to fall under the same sub-heading. Referring to the process of manufacture given in the lower heading, he claimed that seal with washer and seal without washer were goods known separately in the market although both were seals and both were covered under the same Tariff Item. It was his claim that operation of drilling and insertion of washer amounted to manufacture creating a new and distinct product. Therefore, the duty for the second time was leviable. Apart from merit, it was his claim that refund claim for Rs. 2819.50 Paise for the period 16-9-1986 to 23-12-1986 was barred by time.

3. The respondents were not present although notice for hearing sent by post was duly acknowledged by them as having been received on 4-12-1997.

4. We have carefully gone through the facts of the case and the arguments made before us.

5. The ratio of the cited judgment of the Supreme Court was followed by the Madras High Court in their decision in the case of Paper Products Limited - 1993 (68) E.L.T. 731 and thereafter by the Tribunal in several cases including the case of C.C.E., Patna v. Hyderabad Asbestos Cement Products Limited - 1994 (72) E.L.T. 877. From the facts before us, there is no doubt that due to the process undertaken on the plain seal, the final product made by the assessee was a seal with washer and as such a commodity distinct from what the input was. In terms of the judgment cited since the process of manufacture was involved the duty was correctly charged once again. We, therfore, allow the 25/1023 appeal, set aside the impugned order and restore the order of the Assistant Collector.