1994 (6) TMI 188 - AT - Central Excise

Summary

Issues:
1. Classification of slivers under Tariff Item 68 for duty payment.
2. Determination of whether the process of preparing slivers amounts to "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944.
3. Examination of time-bar issue regarding the refund claim filed by the appellants.

Analysis:

1. The appellants, engaged in textile manufacturing, prepared cotton/polyester blended slivers for captive use in yarn and fabric production. They paid duty on cleared slivers but later filed a refund claim, contending that slivers were not dutiable. The lower authorities classified slivers under Tariff Item 68, leading to the rejection of the refund claim.

2. The appellants argued that slivers were cleaned fibres without a distinct character or use, hence not constituting "manufacture" under Section 2(f) of the Act. Citing FAIRCHILD'S DICTIONARY OF TEXTILES, they emphasized that slivers were a stage in fibre processing, not a new article. The tribunal agreed, referencing the Supreme Court's definition of "manufacture" as creating a new substance with distinct characteristics, which slivers did not possess compared to fibres.

3. The Revenue justified the duty imposition, distinguishing slivers from acrylic tops and highlighting the marketability aspect. However, the tribunal found that slivers were integral to fibres, lacking distinct characteristics or use, thus not amounting to manufacture. The tribunal directed re-examination of the time-bar issue, emphasizing the need for a clear decision based on available evidence.

4. Vice President Bhatnagar concurred with the tribunal, stating that the Department failed to prove the emergence of a new commodity from slivers. He agreed that no manufacturing process occurred, rendering the material non-excisable. Additionally, he noted that the sale of a small quantity did not establish slivers as a distinct market commodity.

5. The time-bar issue was addressed, with the Collector (Appeals) noting partial time-barred refund claims. The Vice President directed the Assistant Collector to assess this aspect thoroughly and issue appropriate orders. Ultimately, the appeals were accepted for remand, indicating a need for further examination and decision on the time-bar issue.

This detailed analysis of the judgment highlights the key legal arguments, interpretations, and conclusions reached by the tribunal and the Vice President, providing a comprehensive understanding of the case's outcome.