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Home Case Index All Cases Central Excise Central Excise + SC Central Excise - 1996 (11) TMI SC This

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1996 (11) TMI 71 - SC - Central Excise


Issues:
The judgment involves determining whether the recording of sound on magnetic cassette tapes constitutes manufacturing for the purposes of Tariff Item 59 of the Central Excise Tariff. The majority view of the Tribunal held that the appellant was engaged in the manufacture of excisable goods, while the dissenting Member took the view that no manufacturing process was involved.

Issue 1: Majority View vs. Dissenting View

The majority view of the Tribunal was that the appellant was engaged in the manufacture of goods excisable under Item 59 of the Central Excise Tariff, while the dissenting Member held that no manufacturing process was involved. The dissenting Member emphasized that no new substance emerged from the recording of sound on the tapes, and thus, there was no transformation resulting in a new and different article. The dissenting Member argued that despite the recording of sound, the tapes remained "articles of a kind used for sound recording." This meant that the tapes could have the sound erased and be reused for recording other sound, indicating that no new article was created through the recording process.

Issue 2: Interpretation of Tariff Item 59

Tariff Item 59 of the Central Excise Tariff pertains to articles used for sound or sound and image recording. The Tribunal's majority judgment did not elaborate on how the recording of sound on tapes could amount to manufacturing under this tariff item. However, the dissenting Member in detail analyzed the issue and concluded that the recording of sound on the tapes did not constitute a manufacturing process. The dissenting Member's analysis focused on the lack of emergence of a new substance and the tapes remaining suitable for repeated use, indicating that the recording process did not result in the creation of a new excisable article under Tariff Item 59.

Issue 3: Precedent and Legal Interpretation

In a previous case before a two-Member Bench of the Tribunal, a similar question had arisen regarding the recording of sound on tapes. The Bench preferred to follow the dissenting view, stating that the recording of sound on tapes did not fall within the definition of manufacture. The Bench reasoned that the recording process did not enhance the value of the tapes as they were already duty paid, and the recording did not create a new excisable article. This precedent supported the dissenting Member's interpretation in the present case.

Conclusion:

The Supreme Court, concurring with the dissenting Member's view and the precedent set by the earlier Tribunal case, held that the recording of sound on magnetic cassette tapes by the appellant did not amount to a manufacturing process under Tariff Item 59. Therefore, the appeal was allowed, the order under appeal was set aside, and no costs were awarded in this matter.

 

 

 

 

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