9911796707
TMI Blog1991 (8) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the decision, the Union of India has filed these three Letters Patent Appeals, viz. L.P.A. Nos. 343, 344 and 345 of 1985. None has appeared on behalf of the appellant to argue the appeals. Unaided by the appellant, we are deciding these three appeals on merits. 2. The respondents herein are manufacturing transmission rubber belting, V-shaped and conveyor belts. The process in the words of the learned Single Judge is as under :- "The petitioners are manufacturers and dealers of T.R. belting, V-shaped and conveyor belts. In order to manufacture these goods, the raw rubber, both natural and synthetic is compounded with various chemicals to make a master batch which is in the form of a sheet. This sheet is like a soft paste and is used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction cloth is not an excisable good; it is not marketable or exchangeable as such and cannot, therefore, be subjected to excise duty. 4. In M/s. Punjab Rubber Allied Industries v. Union of India and Others, 1983 (12) E.L.T. 54, a Division Bench of this Court held that the process of manufacture of transmission rubber belting/V-shaped belts and conveyor belts involved a composite, integrated and uninterrupted process and if 'friction cloth' comes into existence at an intermediary stage, the department is not justified in demanding excise duty as the product could not be used or sold in the market as such. To take away the effect of this decision which was rendered in September 1981, Rules 9 and 49 of the Central Excise Rules, 1944 (hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be levied and collected on any excisable goods which are produced or manufactured, (i) in a free trade zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and allowed to be sold in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under section 12 of the Customs Act, 1962 (52 of 1962), on like goods produced or manufactured outside India if imported into India, and where the said duties of Customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 (52 of 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or under sub-rule (1), shall be deemed to have been removed from such place or premises immediately before such consumption or utilisation." "Rule 49. Duty chargeable only on removal of the goods from the factory premises or from an approved place of storage. - (1) Payment of duty shall not be required in respect of excisable goods made in factory until they are about to be issued out of the place or premises specified under Rule 9 or are about to be removed from a store-room or other place of storage approved by the Collector under Rule 47. xx xx xx xx xx xx Explanation :- For the purposes of this rule, excisable goods made in a factory and consumed or utilised - (i) as such or after subjection to any process or processes; or (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 read with entry 27 of the 1st Schedule thereto." 6. In view of the above, it follows that to be excisable the goods must be marketable. These should be 'exchangeable'. The goods should be capable of being bought or sold. 'Friction Cloth' is not included in the Schedule. It is not a finished product. It is not bought or sold. It is not marketable. Literally it cannot even be described as a "cotton fabric" subjected to the process of "rubberising". It is only a stage, in fact an intermediary stage, for the production of transmission V-shaped belting or conveyor belts. We are of the view that friction cloth is not even a distinct marketable or 'economically exchangeable' goods. It does not conform to the description given in Item 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently unless it is found that an excisable goods has been manufactured the liability to pay excise duty does not arise. While excise duty was not leviable on any goods which came into existence at an intermediate stage under the original rule if it was used for producing another excisable goods in a continuous and integrated course, the product has become subject to levy by virtue of the explanation added to Rule 9. In the present case, friction cloth was neither subject to levy originally, nor has it become exigible to excise duty after the amendments of the Rules. To illustrate. A unit manufacturing rain-coats may be producing rubberised cloth at an intermediate stage. Under the original provision the excise duty could be leviable (sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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