Supreme Court: Lamination of Kraft Paper with Polyethylene Equals 'Manufacture'

LAMINATED PACKINGS (P) LTD. Versus COLLECTOR OF C. EX.

LAMINATED PACKINGS (P) LTD. Versus COLLECTOR OF C. EX. - 1990 (49) E.L.T. 326 (SC) , 1990 (3) SCR 630, 1990 (4) SCC 51, 1990 (3) JT 493, 1990 (2) SCALE 272 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 Characteristics
The 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 Goods
Regarding 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.