1990 (8) TMI 141 - SC - Central Excise

Laminating duty-paid kraft paper with polyethylene creates a new product treated as 'manufacture'; excise duty payable, credit under Rule 56A

SC held that laminating duty-paid kraft paper with polyethylene produces a new, identifiable product and amounts to 'manufacture' liable to excise duty. ... Laminated paper - Manufacture - Whether the lamination of duty paid kraft paper with polyethylene resulting in `polyethylene laminated kraft paper' would amount to `manufacture' and excisable under law or not. - HELD THAT:- The fact that the duty has been paid on the kraft paper is irrelevant for consideration of the issue before us. If duty has been paid, then benefit or credit for the duty paid would be available to the appellant under Rule 56A of the Central Excise Rules, 1944. `Manufacture' is bringing into being goods as known in the excise laws, that is to say, known in the market having distinct, separate and identifiable function. On this score, in our opinion, there is sufficient evidence. If that is the position, then the appellant was liable to pay duty. We are, therefore, clearly of the opinion that the order of the CEGAT impugned in this appeal does not contain any error. The appeal, therefore, fails and is accordingly dismissed. Issues:The appeal concerns the question of whether the lamination of duty paid kraft paper with polyethylene resulting in 'polyethylene laminated kraft paper' amounts to 'manufacture' and is excisable under the law.Details of the Judgment:Issue 1: Lamination as 'Manufacture'The Supreme Court held that lamination, according to established excise law principles, constitutes 'manufacture.' Citing precedents such as Empire Industries Ltd. & Ors. v. Union of India & Ors. and Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co., the Court determined that the process of lamination results in the creation of distinct goods. Laminated kraft paper is considered separate and different from kraft paper in the market.Issue 2: Duty Payment and Essential CharacteristicsThe Court addressed the argument that since the kraft paper was duty paid and there was no change in its essential characteristics post-lamination, it should not be subject to duty again. However, the Court emphasized that the duty payment on the kraft paper is irrelevant in determining the liability for duty post-lamination. The appellant could avail benefit or credit for the duty paid under Rule 56A of the Central Excise Rules, 1944.Issue 3: Identification of GoodsRegarding the contention that the goods belong to the same entry and are identifiable in the market, the Court ruled that even if the goods are from the same entry, if they are distinct and identifiable in the market, manufacture occurs and duty is applicable. The Court found sufficient evidence to support the position that the appellant was liable to pay duty post-lamination.The Court dismissed the appeal against the order of the Customs, Excise & Gold (Control) Appellate Tribunal, stating that the impugned order did not contain any error. The appellant's argument was not accepted, and the appeal was consequently dismissed. No costs were awarded in this matter.