1990 (5) TMI 158 - AT - Central Excise

'Agarbathies' Classified as Handicrafts for Exemption

COLLECTOR OF CENTRAL EXCISE Versus AMBICA CHEMICAL PRODUCTS

The Tribunal upheld the classification of 'Agarbathies' as handicrafts for exemption under Notification No. 234/82-C.E., rejecting the Revenue's argument ... Exemption Issues:- Challenge to order-in-appeal by Revenue under Sec. 35E(4) of Central Excises and Salt Act, 1944.- Classification of 'Agarbathies' as handicrafts for exemption under Notification No. 234/82-C.E.- Use of power in manufacturing process affecting entitlement to exemption.- Applicability of previous judgments on similar products.- Interpretation of Notification No. 234/82-C.E. and Notification No. 179/77-C.E.Analysis:The judgment involves an appeal by the Revenue against the order-in-appeal passed by the Collector of Central Excise, Madras, regarding the classification of 'Agarbathies' as handicrafts for exemption under Notification No. 234/82-C.E. The respondents claimed exemption from duty under Notification No. 179/77-C.E., contending that 'Agarbathies' are 'hand-made' and qualify as handicrafts. The Revenue argued that the use of power in the manufacturing process disqualifies the product from claiming the benefit of the said notification, citing a Supreme Court decision in a similar case.The Advocate for the Respondent countered by referring to previous judgments and notifications, emphasizing that the use of power does not automatically exclude a product from being classified as a handicraft. The Advocate distinguished the present case from the Supreme Court decision by highlighting the specific nature of 'Agarbathies' and the absence of a prohibition on power usage in the relevant notifications. Reference was made to a High Court decision supporting the classification of 'Agarbathies' as handicrafts.The Tribunal analyzed the arguments, noting that previous judgments on different products do not directly apply to the case at hand. The Tribunal highlighted the distinction between 'Agarbathies' and 'Dhoop sticks' in terms of manufacturing processes and end products. It was observed that the use of power in certain stages of production does not automatically disqualify a product from being considered a handicraft, as long as the essential character of the product is shaped by hand labor. The Tribunal found that the Revenue failed to demonstrate any flaws in the impugned order and upheld the classification of 'Agarbathies' as handicrafts, leading to the dismissal of the appeal.