2008 (3) TMI 180 - AT - Central Excise

Tribunal rules decoration of glassware not manufacturing under Central Excise law, grants exemption

The Tribunal ruled in favor of the respondents in a case concerning the imposition of duty on decorated glassware held in stock. It held that the ... Assessee purchased duty paid plain glass & glassware and after decorating the same, the decorated glass and glassware were sold – since impugned process of decoration became excisable only w.e.f. 19.7.1988, stock of goods prior to this date are not liable to duty – in view of notification 5/98, since the respondents have not taken credit of the input duty on plain glassware, they are clearly eligible to the exemption - respondents are eligible for valuation of decorated glassware u/r 6(b)(ii) Issues:1. Whether decorated glassware lying in stock on 18-7-98 should be charged to dutyRs.2. Whether respondents are eligible for valuation of decorated glassware under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975Rs.Analysis:Issue 1:The case involved a dispute regarding the imposition of duty on decorated glassware lying in stock on 18-7-98. The respondents argued that the process of decoration of glass and glassware did not amount to manufacture under the Central Excise law, citing a Supreme Court decision. The Department contended that duty should be charged on the stock based on a previous Supreme Court decision. The Tribunal examined the legal provisions and case laws cited by both parties. It was observed that the introduction of Chapter Note 6 to Chapter 70 imposed a new levy on decorated glassware, which was previously outside the excise levy. The Tribunal found that the decision of the Supreme Court in a related case clearly applied in this situation. The Tribunal differentiated this case from another Supreme Court decision, emphasizing that the goods in stock before becoming excisable cannot be charged to duty.Issue 2:Regarding the valuation of decorated glassware, the respondents were claiming exemption under a notification because they had not taken Modvat credit on the input duty for plain glassware. The Department argued that the valuation should be based on the sale price of the decorated glassware minus the purchase price of plain glassware. The Tribunal analyzed the wording of the notification and the method of valuation applied by the Lower Appellate Authority. It was noted that the notification used the term 'value charged' instead of 'value added,' creating a discrepancy in valuation methods. The Tribunal found that the respondents were eligible for the exemption based on the specific wording of the notification. The Department's appeal on this issue was rejected, with the Tribunal suggesting a modification in the notification language if a different valuation method was desired in the future.In conclusion, the Tribunal rejected the Department's appeal on both issues, providing detailed reasoning based on legal provisions, case laws, and the specific language of the relevant notifications. The judgment clarified the application of excise duty on decorated glassware and the valuation methodology under the Central Excise law.