Whether laminated non-woven fabrics manufactured out of duty paid non-woven fabrics are again dutiable under Chapter heading 56.03 of the Central Excise Tariff Act, 1985 - Central Excise - 5/91-CX-l

Whether laminated non-woven fabrics manufactured out of duty paid non-woven fabrics are again dutiable under Chapter heading 56.03 of the Central Excise Tariff Act, 1985 Circular No. 5/91-CX-l Dated 3-4-1991 [From F.No. 56/l/91-CX-l] Government of India Central Board of Excise Customs New Delhi Subject : Whether laminated non-woven fabrics manufactured out of duty paid non-woven fabrics are again dutiable under Chapter heading 56.03 of the Central Excise Tariff Act, 1985. A doubt has been raised as to whether laminated non-woven fabrics, manufactured out of non-woven fabrics on which duty has been paid under Heading 56.03, are again dutiable under Chapter heading 56.03 of the Central Excise Tariff Act, 1985. 2. It is reported that a manufacturer procures duty paid non-woven fabrics and then undertakes the process of coating/laminating them with LDPE. The contention of the manufacturer is that the resultant product is not leviable to duty again under the same sub-heading, namely 5603.00, as coating and lamination is being done on fabrics on which duty has already been discharged under the same heading. 3. The field formations are of the view that the finished product, even if manufactured from duty paid raw materials and falling under the same sub-heading as the raw material, would be liable to duty provided there is emergence of a distinct commodity commercially known as such having different character, use and name. The basis for such a view is that the raw materials undergo a process of manufacture as defined under Section 2(f) of Central Excises and Salt Act, 1944. In the instant case, the position obtaining is that, on conversion of raw material into finished product by process of lamination a new product having different characteristic, name and use and known in the market as such emerges which attracts further duty liability under the same sub-heading. 4. The issue was discussed in the North Zone Tariff-cum-General Conference held at Jaipur on 8th-9th, February, 1991. The Conference felt that there was no doubt about the fresh duty liability of laminated non-woven fabrics, since it was a commodity with distinct name and character and different from non-woven fabrics. 5. This issue was further examined in the Board. The raw-material and the finished product may fall in the same heading but this does not preclude the excisability of the manufactured product having a distinct name, character and use. In the instant case, the assessee had manufactured coated/laminated woven fabrics which is distinct from the raw-material. Therefore, the durability of the new product is beyond doubt. Board agrees with the views of the Tariff Conference. 6. Field formations and trade interests may be informed accordingly.