TMI Blog1992 (7) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... as to why Central Excise duty amounting to Rs. 21,74,887.68 should not be recovered from them on Compounded Rubber removed by them for the manufacture of Hawai Chappals during the period 1-3-1986 to 31-10-1988. It was alleged that Compounded Rubber which emerged as an intermediate product in the manufacture of Hawai Chappals in the appellants factory, being in primary form in terms of Note 3 to Chapter 40 was liable to duty under Heading 4005.00 since it was not covered by Notification No. 71/68 dated 1-4-1968 which covered rubber products in the form of plates, sheets and strips. The appellants denied the charges and claimed that Compounded Rubber was covered by Notification No. 71/68 or alternatively it could be deemed as eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that even if the appellants claim for exemption of the compounded rubber under Notification No. 71/68 dated 1-4-1968 was denied on the grounds that it was not in the form of regular sheets it could not be denied the benefit of Notification No. 152/87 since in the second stage the Rubber Compound in question was used for conversion into vulcanised sheets falling under Chapter 40. He contended that while denying the benefit of Notification No. 152/87 on the ground that Compounded Rubber was used by the appellants for the manufacture of Hawai Chappals falling under sub-heading 6401.11 the Collector overlooked the fact that in the second stage the Rubber Compound used in the appellants factory for conversion into vulcanised sheets, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e argued that compounded rubber used by the appellants was eligible for exemption under Notification No. 152/87 since it was used for the manufacture of rubber sheets, falling under Chapter 40. 5. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that the only question to be examined in this case is whether compounded rubber which emerges as one of the intermediate products in the manufacture of Hawai Chappals would be covered by any of the Notification Nos. 71/68 or 152/87. 6. It is seen that the first stage in the manufacture of rubber chappals in the appellants factory involves the mixing of raw rubber with chemicals, fillers, accelerators etc. in a mixing mill to produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced below: In exercise of the powers conferred by Rule 8(1) of the Central Excise Rules, 1944, and HI supersession of the notification of the Government of India in the M.F.(D.R.) No.31-/64-CE, dated1-3-1964, the Central Government hereby exempts all rubber products in the form of plates, sheets and stripsFunhardened whether vulcanised or not; and whether combined with any textile material or otherwise (other than the products which are made either wholly or partly of rubber and which are used for the resoling, retreading or repairing of tyres, including the products commonly known as tread rubber, camel back, cushion compound, cushion gum, tread gum and tread packing strips), falling under Chapter 40 of the Schedule to the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed with in factory of production -In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts compounded rubber, falling under Heading No. 40.05 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule provided that such compounded rubber is used in the factory of its production for the manufacture of goods falling under Chapter 40 of the said Schedule. The learned counsel for the appellants has contended that Compounded rubber unvul canised in primary form cannot be straightaway converted into Rubber Chappals since, there are three distinct stages in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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