2004 (5) TMI 413 - AT - Central Excise

Summary

Issues:
Classification declaration for waste of release paper; Proper excise duty determination on used release paper; Correct payment of Central Excise Duty.

Classification Declaration Issue:
The appellants, a manufacturer of Leather Cloth, were charged with failure to file a proper classification declaration for the waste of release paper as required under Rule 173B of the Central Excise Rules, 1944. The lower authorities confirmed the demands, leading to the appeals. However, the Tribunal found that the release paper used in the manufacture of Leather Cloth does not change its identity after use and does not amount to manufacture. The release paper, even though used in the manufacturing process, remains understood only as release paper and does not become part of the final product. Relying on previous judgments, the Tribunal concluded that no further duty is required to be charged on the use of release paper as a manufacture under the Central Excise Act. Therefore, the orders demanding classification declaration were not upheld, as there is no need to classify goods that are not manufactured.

Proper Excise Duty Determination Issue:
The appellants were also accused of failing to determine the proper excise duty on the used release paper before its removal, as required under Rule 173F of the Central Excise Rules, 1944. However, the Tribunal held that since the release paper does not transform into the final product of Leather Cloth and remains distinct as release paper even after use, no additional duty is applicable on its use in the manufacturing process. Citing relevant legal precedents, the Tribunal concluded that release paper, not being a raw material that transforms into the final product, does not attract further duty under the Central Excise Act. Therefore, the demand for proper excise duty determination on the used release paper was dismissed.

Correct Payment of Central Excise Duty Issue:
The appellants were alleged to have failed to pay the correct amount of Central Excise Duty as required under Rule 9(1) read with Rule 173G of the Central Excise Rules, 1944. However, the Tribunal, after considering the nature of the release paper and its role in the manufacturing process of Leather Cloth, determined that no additional duty is chargeable on the use of release paper. As the release paper does not undergo a change in identity and remains distinct from the final product, it does not qualify as a manufactured good attracting further duty. Relying on established legal principles, the Tribunal held that no additional Central Excise Duty is applicable on the use of release paper in the manufacturing process. Consequently, the appeals were allowed, and the demand for correct payment of Central Excise Duty was set aside.