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PETITIONER: DECORATIVE LIMINATES (INDIA) PVT. LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, BANGALORE.

DATE OF JUDGMENT:       31/07/1996

BENCH: THOMAS K.T. (J) BENCH: THOMAS K.T. (J) BHARUCHA S.P. (J)

CITATION:  JT 1996 (7)   627        1996 SCALE  (5)582

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T THOMAS, J.      This appeal  is in  challenge of an order passed by the Customs,  Excise   and  Gold  (Control)  Appellate  tribunal (CEGAT) repelling  the contention  of the appellant that the commodity commercial  plywood processed  by the appellant is not liable  to excise  duty as  the duty  was paid  for  the plywood before its processing.      The case  of the  appellant - company is the following. Appellant is  engaged in  processing commercial  plywood  by applying Phenol  Formaldehyde Resin  under 100 per cent heat and pressure and costs the plywood with wire mesh, either on one side  or on  both sides  so as  to make  it  slip  proof commercial plywood.  The product  is  mostly  used  in  body building of  vehicles or  for flooring etc. On 3.9.1986, the assistant Collector  of Central  Excise  issued  show  cause notice to the appellant company, in which it was stated that since non-slip  plywood is a different products it is liable to duty as falling under sub-heading 44008-90 (Chapter 44 of the Schedule  to  the  Central  Excise  Tariff  Act,  1985). Appellant in  the reply he explained that commercial plywood was once  subjected to  duty and  hence cannot again be made dutiable merely  on the  strength of  the processing done by the appellant.  The processed  commodity does  not become  a different product  not the processing exercise a manufacture according to  the appellant. Some earlier proceedings, which culminated in  refunding the duty collected on such products when  the  department  latter  realised  that  no  duty  was chargeable on  such commodity,  have also  been relied on by the appellant to bolster up its stand.      The Assistant  Collector took  the view  that the slip- proof  commercial  plywood  (made  after  carrying  out  the processing work) is a different products and so is liable to duty under  the relevant  subheading of  the Schedule to the Act.      Collector of  Central Excise  (Appeals)  confirmed  the

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said order  of the  said order  of the Assistant Collector - CEGAT by  the impugned  order has  concurred with  the  said finding and dismissed the appeal filed by the appellant.      Learned counsel  for the appellant first contended that since the  department took  a view in the earlier proceeding (which culminated  in the  order passed in 1985) that no new product  was  emerging  from  the  processing  done  by  the appellant the  same  benefit  has  to  be  afforded  to  the appellant now  also. We  are  not  disposed  to  decide  the question merely on the strength of the stand which Assistant Collector had  adopted prior  to 1985.  Then counsel invited our attention to the advice tendered by the Board of Central Excise in  1975 that  "Duty should be charged at the plywood stage as  commercial plywood and subsequent alterations etc. should be  ignored" (vide  CBE &  C Bulletin  for January  - March, 1975).  Such an  advice is irrelevant in dealing with the tariff prescribed in 1985.      CEGAT has  considered the  factual position whether the process of  applying Phenol Formaldehyde Resin on plywood is only nominal  process which  does not affect the identity of the  commodity  or  whether  it  is  a  substantial  process resulting in  the emergence  of a  new  commercial  product. According to  the CEGAT,  answer to the question whether any particular processing would result in the emergence of a new commercial products depends on various factors like- to what extent the  value is  added, whether the product is prepared for a  separated use. In the case of non-slip plywood, after coating it  with Phenol  Formaldehyde Resin  and pressing it with enroller, the department took the view before the CEGAT that it  becomes a new product. CEGAT accepted the aforesaid stand of the department and found that application of Phenol Formaldehyde  Resin  results  in  the  emergence  of  a  new commercial products.      Learned counsel  for the appellant contended before use that no  real change  taken place  on  the  plywood  despite subjecting the  article to  heat and  pressure to  apply the Resin and coating it with wire mesh. But in the light of the finding of  the Tribunal  that the  plywood which  appellant purchased  has   turned  into   a  new  commercial  products acquiring  a  different  identity  there  is  no  scope  for contending  that   the  end   product  is  not  a  different commodity.      Learned counsel for the appellant tried to seek support from the  decision of this Court in Gujarat Steel Tubes Ltd. and anr.  Vs. State of Kerala and ors., 1989 (3) SCC 127. In the sales  tax proceedings  taken against the petitioners in the case  it was  contended that  galvanized iron  pipes and types are  a commercially  different  commodity  from  steel tubes.  This   Court  pointed   out  that   the  purpose  of Galvanizing the  steel pipe  is merely  to make  it weather- proof.      Nor does the decision in Collector of Customs & Central Excise and Anr. vs. Oriental Timber Industries, 1985 (3) SCC 85, cited before us by the learned counsel afford any useful support  to   the  appellant’s   contention.  The   question considered therein  was the  stage at which the plywood used for manufacturing plywood "circles" became liable  to excise duty. In  Collector of  Central Excise  Bombay  vs.  Popular Cotton Covering  Works, 1994  (73) ELT  264, the  contention raised by  the assessee  was that  the works done by him for winding cotton  or fibre-yarn  on the electric wire does not amount to  manufacture of  a new product. the contention was upheld by  this Court on the basis of the finding arrived at by  CEGAT   that  no  new  commercially  recognised  article district from  electric wire was come into existence. It was

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pointed out  in the decision that the excise authorities did not lead  any evidence  to establish  that winding cotton or fibre class  yarn upon electric wire would bring about a new commercially recognised article. Those decisions, therefore, do not help the petitioner.      Shri Joseph  Vallappally, learned  senior  counsel  who argued for  the respondent, cited the decision of this Court in Laminated  Packings (P)  Ltd. vs.  Collector  of  Central Excise, 1990  (49) ELT  326, and  submitted that  the  ratio therein has  a fare greater bearing on the issue involved in the case.  The question  with polyethylene  would amount  to manufacture. The  Collector (Appeals) had taken the view the lamination process on duty paid kraft paper would not invite duty again.  But this  Court held that lamination amounts to manufacture as  it involves  a  process  for  bringing  into existence a  different commodity  distinct from kraft paper. Sabyasachi Mukherji,  CJ, has observed in that decision that "laminated Kraft  paper is  distinct, separate and different commodity know  in the market as such from the Kraft paper". There Lordships  did not  agree with  the contention  of the counsel that since duty was paid on kraft paper and since no change in  the essential  character or  use of the paper had been brought to the commodity it cannot be subjected to duty once again.  We agree  with the  learned  counsel  that  the position in  this case  is not very different from the above case .  The fact  finding authority  has correctly concluded that the  end product  is distinctly  different from what it was before the processing was done on it.      We find  no merit  in the  appeal, and  accordingly  we dismiss it. No costs.