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PETITIONER: LAMINATED PACKINGS (P) LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, GUNTUR

DATE OF JUDGMENT06/08/1990

BENCH: MUKHARJI, SABYASACHI (CJ) BENCH: MUKHARJI, SABYASACHI (CJ) SAIKIA, K.N. (J)

CITATION:  1990 SCR  (3) 630        1990 SCC  (4)  51  JT 1990 (3)   493        1990 SCALE  (2)272

ACT:     Central Excises and Salt Act, 1944: Section 2(F)--"Manu- facture" --Lamination of duty paid kraft paper with polyeth- ylene--Resultant  product whether "manufactured" and  dutia- ble--Criteria--Market parlance --Goods with distinct,  sepa- rate and identifiable function--Coming into being. Words and Phrases: "Manufacture"--Meaning of.

HEADNOTE:     To  a  question whether lamination of  duty  paid  kraft paper with polyethylene resulting in ’polyethylene laminated paper’  would  amount to ’manufacture’ and  excisable  under Excise  Law, the Collector of Central Excise  (Appeals)  an- swered  in  the negative, and held that  the  appellant  was eligible  to  claim refund of duty paid by it.  In  reaching this  finding he followed the decision in  Standard  Packag- ings, Nellore v. Union of India, [1984] ECR 2635 AP.     Against the said order, the Collector of Central  Excise preferred  an appeal before the Customs, Central Excise  and Gold (Control) Appellate Tribunal. The Tribunal reversed the order of the Collector (Appeals) and held that the appellant was liable to duty.     Aggrieved, the appellant has preferred this appeal under Section  35-L(b) of the Central Excises and Salt Act,  1944. It  was contended that duty was already paid on kraft  paper and  there was no change in the essential characteristic  or the  user of the paper after lamination, and that  both  the goods belong to the same entry. Dismissing the appeal,     HELD: 1.1. By process of lamination of kraft paper  with polyethylene  different  goods come  into  being.  Laminated kraft  paper  is distinct, separate and different  from  the kraft  paper. Lamination, indisputably by  the  well-settled principles of excise law, amounts to manufacture. [632C-D] 631     1.2. ’Manufacture’ is bringing into being goods as known in  the  excise laws, that is to say, known  in  the  market having distinct, separate and identifiable function. [632F]     1.3.  Even  if the goods belong to the same  entry,  the goods are different identifiable goods, known as such in the market.  If that is so, manufacture occurs, and if  manufac- ture takes place, it is dutiable. [632F]

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   Empire Industries Ltd. & Ors. v. Union of India &  Ors., [1985] 3 SCC 314 and Collector of Central Excise, Kanpur  v. Krishna Carbon Paper Co., [1988] 37 ELT 480, relied on.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 2335  of 1989.     From Order No. 766/88-C dated 24.10.1988 of the  Customs Excise  and Gold (Control) Appellate Tribunal, New Delhi  in Appeal No. B/847/85-C. V.  Sreedharan, N.M. Poppli and V.J. Francis for the  Appel- lant.     Ashok H. Desai, Solicitor General, Ms.  Randharangaswami and P. Parmeswaran for the Respondent. The Judgment of the Court was delivered by     SABYASACHI  MUKHARJI,  CJ. This is an  appeal  from  the order  of  the Customs, Excise &  Gold  (Control)  Appellate Tribunal  (hereinafter called ’the CEGAT’) dated 24th  Octo- ber,  1988  under section 35-L(b) of the Central  Excises  & Salt Act, 1944 (hereinafter referred to as ’the Act’).     The appeal which the CEGAT disposed of had been filed by the Collector of Central Excise, Guntur against the order of the Collector of Central Excise (Appeals), Madras dated  6th February,  1985.  The short question which  arises  in  this appeal  is whether the lamination of duty paid  kraft  paper with polyethylene resulting in ’polyethylene laminated kraft paper’ would amount to ’manufacture’ and excisable under law or not. It appears that the Collector (Appeals) in his order following  his  earlier order in respect  of  the  appellant herein  had  taken the view that polyethylene  laminated  or coated  kraft paper obtained from duty paid kraft  paper  is not liable to duty again. 632     The  Collector of Central Excise, (Appeals), Madras  had followed  the decision of the Division Bench of Andhra  Pra- desh High Court in the case of Standard Packagings,  Nellore v.  Union  of India, [1984] ECR 2635 (AP) for  reaching  the aforesaid  finding  and  held that the  appellant  would  be eligible  to claim refund of duty paid by them in  this  re- gard.     Lamination, indisputably by the well settled  principles of  excise law, amounts to ’manufacture’. This question,  in our  opinion,  is settled by the decisions  of  this  Court. Reference  may  be  made to the decision of  this  Court  in Empire  Industries  Ltd. & Ors. v. Union of  India  &  Ors., [1985] 3 SCC 314. Reference may also be made to the decision of  this  Court in Collector of Central  Excise,  Kanpur  v. Krishna Carbon Paper Co., [1988] 37 ELT 480. We are,  there- fore, of the opinion that by process of lamination of  kraft paper  with  polyethylene different goods come  into  being. Laminated  kraft paper is distinct, separate  and  different goods known in the market as such from the kraft paper.     Counsel  for  the appellant sought to contend  that  the kraft  paper was duty paid goods and there was no change  in the essential characteristic or the user of the paper  after lamination.  The  fact that the duty has been  paid  on  the kraft  paper  is irrelevant for consideration of  the  issue before us. If duty has been paid, then benefit of credit for the duty paid would be available to the appellant under rule 56-A of the Central Excise Rules, 1944.     The further contention urged on behalf of the  appellant that the goods belong to the same entry is also not relevant because  even  if the goods belong to the  same  entry,  the

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goods are different identifiable goods, known as such in the market.  If that is so, the manufacture occurs and if  manu- facture  takes  places,  it is  dutiable.  ’Manufacture’  is bringing into being goods as known in the excise laws,  that is to say, known in the market having distinct, separate and identifiable function. On this score, in our opinion,  there is  sufficient evidence. If that is the position,  then  the appellant was liable to pay duty. We are, therefore, clearly of the opinion that the order of the CEGAT impugned in  this appeal  does not contain any error. The  appeal,  therefore, fails and is accordingly dismissed. There will, however, no order as to costs. G.N.                                          Appeal    dis- missed. 633