Captive consumption of straw boards under the same tariff item did not justify double excise duty, with in-house use exemption applied.

Single ply straw boards captively consumed in the same factory for manufacture of multiple ply straw boards were treated as the same excisable commodity under the tariff description of paper and paper board including straw board. The Tribunal held that the process of pasting single ply sheets together did not create a distinct product such as paste board, so duty could not be levied twice on the same commodity merely because of an internal manufacturing stage. For the relevant period after Notification No. 187/83, in-house consumption of goods for manufacture of another commodity falling under the same tariff item satisfied the proviso to Rule 9, and Rule 49(4) supported the same position.

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Issues: Whether single ply straw boards captively consumed in the same factory for manufacture of multiple ply straw boards were separately liable to central excise duty, and whether the exemption from duty for in-house consumption under the relevant excise rules applied.

Analysis: The tariff description of paper and paper board including straw board was held not to distinguish between single ply and multiple ply straw boards. The resultant multiple ply boards were not shown to be a different commodity such as paste board, and the process of pasting single ply sheets together did not create a product outside the description of straw board. On that footing, levying duty on the single ply boards and again on the multiple ply boards would amount to double levy. The Tribunal further held that, for the relevant period after the amendment introduced by Notification No. 187/83, goods consumed in the same factory for manufacture of another commodity falling under the same tariff item could be removed without payment of duty, satisfying the conditions in the proviso to Rule 9. Rule 49(4) was treated as supporting the same in-house consumption position.

Conclusion: The single ply straw boards were not exigible to a second levy when used captively for making multiple ply straw boards, and the assessee was entitled to the benefit of the excise rule for the relevant period.

Ratio Decidendi: Where captively consumed inputs and the final product remain the same excisable commodity under the same tariff item, duty cannot be levied twice merely because of an internal manufacturing stage, and in-house consumption satisfying the rule conditions does not attract a separate duty demand.

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