COLLECTOR OF CUSTOMS & CENTRAL EXCISE & ANR. versus M/S. ORIENTAL TIMBER INDUSTRIES

Citation: [1985] 3 S.C.R. 475 · Decided: 26-03-1985 · Supreme Court of India · Bench: D.A. DESAI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

t ..
47S
COLLECTOR OF CUSTOMS & CENTRAL EXCISE & ANR. ·
v,
M/S. ORIENTAL TIMBER INDUSTRIES
March 26, 1985.
(D.A. DESAI AND AMARENDRA NATH SEN, JJ.)
Central Excise ~ Salt Act 1944 First Schedule Item 16B.
Plywood
circles-Manufacture of-Assessment to duty-Determination of.
The respondent firm is a manufacturer of plywood circles to be used as
com.ponent part of packing materials for wire and cables.
The firm used to be
assessed to duty under the Central Excise and Silt Act, 1944. On thC basis of
the Total area of the circles manufactured and the duty to be collected when
the circles were issued out of the factory premises.
An audit objection was
taken to this mode of assessment on the ground that the process of cuttiQg out
circles and punching of holes cannot be considcr~d as incidental or anciH3.ry to
the. coinplction of the manufacture of plywood, that the levy of excise duty
P,ust be on the total area of blocks or panels of plywood that come out of the
pfess aftd not on the area of the circles made out of the blocks or · panels and
tho,t by plywood- it was meant only plywood which had a general market and
pot plywood circles sf)ccially _manufactured
for~ particular purpose or a
particular customer. Pursuant to the audit objection, the Central Excise Range
bffieer issued a notice ca1ling upon the firm to furni~h firea of the plywood
tnanufacture~ Jlt the panel stage for -taking clearance. of the plywood circl~s.
lt was also mentioned that the assesement of the plywood circles would be
jllade at.the panel stage and not on the finished circles and directed the firm to
file ARI accordingly.
The
firm sent reply through an Advocate and wanted
. the order or the -Collector referred to in the notice, but the same was not
furnished and instead the Range Officer issued another notice reiterating the
earlier stand and directed that duty paid on plywood panels cleared outside
the factory could not be brought back for .further process of cutting circles
With prior permission.
The firm challenged the' validity of the two notices under ArticIC 226 of
the Constitution.
A Single Judge of the High Court disPosing of the Writ
petition directed the CoUCctor to issue a copy of the order refei-red to iri the
nritice of the Range Officer dated 22-2-67 within a month and On feceipt of
that order the firm .mi8h\ Seek ·appropriate remedie&. b)' W"f Of appe1J Upl)~f
the it~tute,
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SUPREME COURT REPORTS.
!1985) 3 S.C.R.
A\
The Division Bench. however, ailowed the appeal of the firm and quashed
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the said two notices.
It held that the real dispute was _ as to what stage the
cxcisC:'dUty became- :teviabJe. on ,.the ·goods.- and_ that the blocks or panels from
which the firm· cuts out circles are all unfinished products, because they will
become furnished products only wPen they are trimmed and their edges are
sanded.
In the ~PPe~t by the R:e~enUe t~ 'this: C~~ri ii was conte~ded -that the '
plywood as and wheri it cOmes out of the press in blocks or panels is a manu-
. factured product known in the market as plywood and is exigible to duty, that
the blocks or panels so manufactuf(d _do not CeaS~ to be plywood Under item
16B merely because they are not trimmed and their edges are not sanded, that
the cutting of the blocks does not form a part of the manufacture of the ply-
wood, that the'clrCtes Which are made b)r thC cuttini of ~he blocks'Md punching
holes into blocks 3.nd panels, do not result in the manufacture of any different
product for the. purpose .. of_ assessment _to, duty and that the plywood e<i.rlier
nlanu'ral.1:urcid' in bl.eeks and PaiieI~ when _it came 'out o~ the Press I can . i,e said
to constitute. materials for the purpose of manufacture of circles and becomes
exigible to duty under Item 16B.
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· ' · 'Allowiiig 'the ; Appeal,
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...... "HELD': I.~,- ThC High cOurt was ·in-~rf~r in quashing ihe·· two
notic~s,'
They-are· ·vaud 'ind' IaWrut.
Item l6B 'makCS it dear· that plyw0od.iri shCets,·
blOck-s; bOards '~r the like attracts e'Xcise duty. ·A sPeci3.t prOvision by way 'of
eXception·is 'made only in ·the ca.Se Or ptyWood for tea-chests when cut' td size
iti Pa.nCls Or- shocks and packed in sets.
The provision ·in Item. 16B that p]y.·
~OOd in. sheets, blocks and board or the like, ·which attr2.cts duty is in very·
broad ·terms · aD.d the Cxpressioll "lik

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