2005 (4) TMI 69 - SC - Central Excise

Supreme Court upholds classification of Lay Flat Tubes as inputs for protective covers

The Supreme Court upheld the Respondent's claim regarding the classification of Lay Flat Tubes as inputs for protective covers/tarpaulins. The Respondent ... Benefit of Notification No. 217/86-C.E., dated 2nd April, 1986 - Lay Flat Tubes - Held that:- it has not been disputed that Lay Flat Tubes are input for protective covers/Tarpaulins. The Respondent was entitled to the benefit of Notification No. 217/86-C.E., dated 2nd April, 1986. The mere fact that they did not show Lay Flat Tubes as input or that they choose to take Modvat credit on duty paid in respect of some material does not dis-entitle them to claim benefit of the Notification - Decided against Revenue. Issues:- Classification of Lay Flat Tubes as input for protective covers/tarpaulins- Benefit of Notification No. 217/86-C.E., dated 2nd April, 1986- Adoption of different excise procedures for different customers- Disputed duty levied on Lay Flat tubingsClassification of Lay Flat Tubes as input for protective covers/tarpaulins:The Respondent manufactures Lay Flat Tubes out of Polyethylene Granules, which are used as input for the manufacture of protective covers/tarpaulins. The Department issued show cause notices alleging that Lay Flat tubings were not shown as input in the classification list or declaration. However, it was established that Lay Flat Tubes are indeed inputs for protective covers/tarpaulins. The Respondent was entitled to the benefit of Notification No. 217/86-C.E., dated 2nd April, 1986. The Supreme Court found no infirmity in the Tribunal's judgment in this regard and upheld the Respondent's claim.Benefit of Notification No. 217/86-C.E., dated 2nd April, 1986:The Respondent followed different excise procedures for sales to two different parties. For sales to Punjab State Civil Supplies Corporation Limited, they paid excise duty on Lay Flat tubings at a specific rate and claimed exemption on protective covers/tarpaulins. For sales to M/s. Indian Petro Chemicals Corporation Limited, the Respondent claimed Modvat credit and paid duty on protective covers/tarpaulins. The Court affirmed that the Respondent was entitled to the benefit of the Notification, irrespective of the method chosen for different customers. The Notification allowed for the exemption or credit claimed by the Respondent, and the Court upheld this position.Adoption of different excise procedures for different customers:The case involved the Respondent adopting different excise procedures for two customers regarding the payment of excise duty on Lay Flat tubings and protective covers/tarpaulins. Despite the Department's contention that two different methods could not be adopted, the Court found that the Respondent's actions were permissible under the law. The choice to follow distinct procedures for different customers did not disentitle the Respondent from claiming the benefits they were entitled to under the relevant Notifications.Disputed duty levied on Lay Flat tubings:The Department issued show cause notices and levied duty on Lay Flat tubings, alleging non-inclusion of these items as inputs and objecting to the adoption of different methods for different customers. However, the Court ruled in favor of the Respondent, emphasizing that Lay Flat Tubes were indeed inputs for protective covers/tarpaulins. The Tribunal's judgment was upheld, and the Appeals were dismissed with no order as to costs.This judgment clarifies the entitlement of the Respondent to claim benefits under specific Notifications, the classification of Lay Flat Tubes as inputs, the permissibility of adopting different excise procedures for different customers, and the validity of the Tribunal's decision regarding the disputed duty levied on the products.