1988 (9) TMI 146 - AT - Central Excise

Tribunal rules stitching jute bags without license is manufacture, upholds duty demand

The Tribunal upheld the demand for unpaid duty on jute bags produced without a Central Excise License, ruling that the stitching of jute fabrics into bags ... Manufacture Jute bags Issues:- Correct classification of jute bags under Central Excise Tariff- Whether the stitching of jute fabrics into bags constitutes a process of manufacture- Liability of jute bags to payment of further dutyAnalysis:1. The case involved the appellants producing hessian bags without a Central Excise License, leading to a demand for unpaid duty. The Collector (Appeals) upheld the demand, prompting the appellants to appeal further.2. The advocate for the appellants argued for the correct classification of the jute bags under Central Excise Tariff, citing previous Tribunal decisions in favor of similar products. The department, however, contested this stance.3. The Tribunal examined the classification issue, emphasizing that previous Tribunal decisions regarding laminated jute bags were not applicable to the current case of simple jute bags. The Tribunal referenced a recent decision where laminated jute bags were classified differently, highlighting the distinction.4. The Tribunal deliberated on whether the stitching of jute fabrics into bags constituted a process of manufacture as per the Central Excises and Salt Act, citing Supreme Court precedents that emphasized the creation of a new substance with a distinct name, character, or use.5. It was concluded that the process of cutting and stitching hessian fabrics into bags indeed constituted a process of manufacture, resulting in the creation of a new commercial product, namely, jute bags.6. The issue of liability for further duty on the jute bags was addressed. The Tribunal ruled that duty was payable separately on hessian cloth and jute bags, as they were distinct products falling under different Central Excise Tariff classifications.7. Ultimately, the Tribunal upheld the lower authorities' orders, dismissing the appeal and affirming the duty liability on the jute bags manufactured by the appellants.