TaxTMI 
TaxTMI 
1990 (12) TMI 107
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....ticated rubber, firstly on the ground that natural rubber does not change its character and become a different substance by the process of mastication. The second reason assigned is that it is exempt, it being natural rubber under Notification No. 189/83, as amended by Notifications dated 10-2-1986 and 7-4-1986. 2. After hearing learned counsel on both sides, we are inclined to agree with the ultimate conclusion of the learned single Judge that masticated rubber does not attract excise duty, but not on the grounds stated by the learned single Judge but on a different ground to be adverted to presently. The second respondent in each of these appeals is the manufacturer of rubber tyres and the first respondent in each of these appeals is t....
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.... land into, any part of India as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act, 1985.". Entry 40.01 of the said Schedule speaks of levy of excise duty at 15% on natural rubber, balatta percha, Guayule, chicle and similar natural gums, in primary forms or in plates, sheets or strips. Thus, it is clear that in order to attract excise duty, masticated rubber has to fall under any one of the items of rubber goods specified under entry 40.01. It is only if the goods are produced or manufactured in India that excise duty stands attracted. 3. The respondents have taken a positive stand that masticated rubber cannot be regarded as goods manufactured or produced in India, as it is only one stage in the process o....
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....ssential ingredient in order to be dutiable." The said decision has been followed and the same principle has been reiterated by the Supreme Court in the subsequent decision in Collector of Central Excise v. Ambalal Sarabhai Enterprises - 1989 (43) E.L.T. 214 (S.C.). It is, therefore, not enough that goods in the name of masticated rubber comes into existence in the process of manufacture of tyres. For such articles to be goods to attract excise duty, it must be shown that masticated rubber is capable of being sold in the market as goods. Even assuming that masticated rubber falls within the Schedule, it would not be dutiable under the excise law, if the said article is not goods known to the market, as marketability is an essential ingre....
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.... anywhere in the world where masticated rubber can be bought or sold. This is, therefore, not an item known to or in the market and is only in the nature of a semi-processed material.". Though a counter-affidavit has been filed by the appellants, these averments remain uncontroverted. Hence, there is no good reason why we should not accept the statement of the respondents to the effect that masticated rubber cannot be regarded as goods manufactured, as there is no market anywhere in the world where masticated rubber can be bought or sold. It is only in the nature of a semi-processed material, a stage in the process of manufacture of rubber tyres. It cannot, therefore, be regarded as goods manufactured, there being no market anywhere in t....