1990 (3) TMI 167

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....goods without payment of duty with wilful intent to evade payment of central excise duty, failed to file classification/price list and for not maintaining proper books of account as required under the provisions of Central Excise Act and Rules. This show cause notice was duly answered by the appellant and mainly contended before the Adjudicating authority that (i) neither he was aware of the new Tariff entry 59A which necessitated the payment of excise duty on recorded cassettes as no publicity was given, nor was liable to pay duty on such recorded cassettes in view of the exemption upto Rs. 5 lakhs under Notification No. 83/83. (ii) There was no intention in evading the payment of duty and he should have been allowed to pay duly under Rule 56A in view of the fact that recording itself is on unrecorded cassettes produced in India which is subjected to duty and they have no plan to manufacture cassettes for recording. (iii) Mere recording on cassettes was not a manufacturing activity as no new product has come into existence and intention of the Legislature would be to levy duty in respect of those manufacturers who manufacture these tapes as well as have the recording thereon. (iv)....

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.... of Prabhat Associates v. Collector of Central Excise [1985 (22) E.L.T. 465], wherein he held that recording sound on duty paid magnetic or cassette tapes is not manufacture and the 'excisable goods' in item 59 of the Schedule are not taxable while defining manufacture and interpreting language under item 59. Dr. S. Narayanan argued that language used in item No. 59 of the Schedule has to be understood in the background of Budget Speech delivered by Finance Minister for the Year 1982-83 and he drew our attention to the Budget Speech wherein Finance Minister while proposing 25% ad valorem on cassette records and such other goods, exempted recordings which are not for commercial purposes. He said that the intention of introduction of this new Tariff and as per the language used in the Tariff is to levy duty in respect of those manufacturers who manufacture these tapes as well as have the recording thereon but not on the process of mere recording on blank cassettes which have already suffered duty. To understand the intention and real meaning of the Legislation the Speech made by the mover of Bill is relevant and he cited the decision in the case of K.P. Varghese v. I.T.0. [1981 (131)....

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....r confusion either in the activity of the appellant or in interpreting the statute the decisions cited by the appellant's counsel (supra) are not applicable to the facts of this case. She argued that decision cited by the appellant's counsel in the case of Prabhat Associates v. Collector of Central Excise [1985 (22) E.L.T. 465] is more favourable to the Department. As per the majority decision it was held that sound recording on cassettes is a manufacturing activity and liable to duty as excisable goods. She stated that though name continues to be the same but in view of change in characteristic and use of the article it is altogether different commodity and ratio of the decision in the case of Delhi Cloth & Gen. Mills Ltd., & Others (Supra) is not applicable. 6. In rejoinder, Dr. S. Narayanan submitted that ambiguity is not ruled out in the language used in the Tariff Item No. 59 and in view of the sound reasoning given by the Judicial Member in the case of Prabhat Associates v. Collector of Central Excise (Supra) recording of sound on duty .paid magnetic or cassette tapes cannot be considered as 'manufacture'. 7. We have given our anxious consideration to the arguments advanced....

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....e first Schedule as being subject to a duty of excise and includes salt. Relevant extracts of item No. 59 is reproduced below :- "59. ARTICLES OF A KIND USED FOR SOUND OR SOUND AND IMAGE RECORDING, WHETHER RECORDED OR NOT, NAMELY :- (1). Magnetic tapes of width not exceeding 6.5 millimetres for sound recording, whether in spools or in reels or in any other form or packing, but excluding cassette tapes. (2). Sound recorded magnetic tapes of width not exceeding 6.5 millimetres, whether in spools or in reels or in any other form or packing but excluding sound recorded cassette tapes. (3). Cassette tapes for sound recording. (4). Sound recorded cassette tapes." The term manufacture either in the Tariff entry or in any notification has to be interpreted on the basis of its definition in the parent Statute. What was not in the main definition of term 'Manufacture' cannot be substituted or enlarged either in the Tariff Entry or in the Notification. Even after going through the tariff entry it does not give clear picture whether it intends to treat recording sound on blank cassette tapes as manufacturing activity. The term manufacture of articles described in Item 59 - "articles of ....