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Surma Valley Saw Mills Pvt. Ltd. Vs. Collector of C. Ex. - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1989)(44)ELT131TriDel
AppellantSurma Valley Saw Mills Pvt. Ltd.
RespondentCollector of C. Ex.
Excerpt:
.....2. before the lower authorities the appellants contended that the value of the teachest battens, sawn timber, fuel wood and saw dust, all of which were at that time taken as falling under item 68 cet, should not be taken into consideration, since they were exempt from duty under a separate notification and therefore, according to them, should not be considered as "excisable goods". this plea was however not accepted by the lower authorities, who held that all the goods were excisable goods and should be taken into account for the purposes of the limit of rs. 20 lakhs under notification no. 80/80.3. appearing before us for the appellants, their learned advocate, shri lodha, advanced a different ground. he submitted that the tribunal had held that sawn timber which was obtained by sawing.....
Judgment:
1. This appeal relates to the claim of the appellants that the benefit of Notification No. 80/80-CE, dated 19-6-1980 was applicable to the plywood manufactured by them during the year 1981-82. In terms of the said notification, they were entitled to benefit from it only if the aggregate value of clearances by them of excisable goods for home consumption did not exceed Rs. 20 lakhs. The value of the different goods clearly by the appellants during 1981-82 were as under:-Plywood for teachests 9,30,105.84Teachests "Battens" 5,69,123.83Sawn Timber 6,36,482.73Fuel Wood & Saw Dust 34,471.40Total ------------- 21,70,263.80 2. Before the lower authorities the appellants contended that the value of the teachest battens, sawn timber, fuel wood and saw dust, all of which were at that time taken as falling under Item 68 CET, should not be taken into consideration, since they were exempt from duty under a separate notification and therefore, according to them, should not be considered as "excisable goods". This plea was however not accepted by the lower authorities, who held that all the goods were excisable goods and should be taken into account for the purposes of the limit of Rs. 20 lakhs under Notification No. 80/80.

3. Appearing before us for the appellants, their learned advocate, Shri Lodha, advanced a different ground. He submitted that the Tribunal had held that sawn timber which was obtained by sawing timber logs was not a different excisable article [1984 (16) E.L.T. 317 in the case of Sanghvi Enterprises v. Collector of Central Excise, Chandigarh]. In another case relating to the present appellants, but for the year 1983-84, the Tribunal, taking into account its decision referred to above, had observed that sawn timber could not therefore be included in the ceiling limit of Rs. 25 lakhs (which was the limit in 1983-84). The Tribunal had therefore allowed that appeal, in terms that if by excluding the value of sawn timber, the appellants became entitled to the exemption, the benefit thereof should be given to them.

4. Shri Lodha submitted that the present case was on all fours with that referred to above, except that the notification was an earlier notification but substantially to the same effect, and that the ceiling limit was Rs. 20 lakhs and not Rs. 25 lakhs. If the value of sawn timber was excluded, the total value of clearances came well within the ceiling limit of Rs. 20 lakhs. He therefore submitted that, following the Tribunal's previous order, we should allow the appeal, so that the benefit of the exemption under Notification No. 80/80 would be available to the plywood for teachests valued at Rs. 9,30,185.84.

5. Shri Sachar, the learned representative of the Department, did not seek to argue that the present case was distinguishable from the previous case of the present appellants covered by the Tribunal's Order No. 147/1985-D, dated 18-4-1985. He however wished to reiterate the arguments submitted by him in that case against acceptance of the appellants' contentions. According to him the Tribunal's order in the case of Sanghvi Enterprises, holding that sawn timber was not excisable, was not correct and needed to be reconsidered. (Shri Sachar stated that appeals had been filed by the Department to the Supreme Court against the Tribunal's decisions in the case of Sanghvi Enterprises and in the previous case of the present appellants). In the previous case relating to the present appellants, Shri Sachar had sought to persuade the Bench that its decision in the case of Sanghvi Enterprises was not correct. He had based his arguments on the proposition that a residue or a by-product in the nature of a new excisable product could arise only in the course of manufacture of a new main commodity. The Tribunal had held that saw dust arising in the course of sawing timber was a new product falling under Item 68.

According to Shri Sachar this ipso facto meant that the sawn timber resulting from the process of sawing would also be a new main commodity. The Tribunal did not accept Shri Sachar's contention. It observed that no authority, technical or judicial, could be found for Shri Sachar's proposition that if a process results in a residue/by-product which is a new article, the main product of the process must necessarily be a new product also. While repelling this contention the Bench cited the case of raw vegetable oil and treated vegetable oil wherein it had been held by the Supreme Court in the DCM case [1977 E.L.T. (J 199)] that no new and different article having a distinctive name, character or use emerged as a result of the processes undergone by the raw oil. Yet the aforesaid treatment or processing of raw vegetable oil resulted in a residue and a by-product, namely, soap stock and glycerine, which were new products. But for that reason the treated vegetable oil itself did not become a new commodity.

6. Shri Sachar submitted that the reasoning given by the Tribunal in the above order was not sound. It had been admitted that a by-product did result from the processing. The Bench had gone wrong in holding that no new main product resulted from the process. According to Shri Sachar a new product did result at the end, and this was the vegetable product which was the final product of the manufacturers. Shri Sachar therefore submitted that the proposition given by him had not been effectively controverted; that the decision of the Tribunal in the Sanghvi Enterprises case was not correct; and that accordingly the argument of the present appellants, based on the ground that sawn timber was not an excisable product, was not acceptable; and that in the result we should hold that the orders of the lower authorities were correct, and should reject the appeal.

7. In reply, Shri Lodha submitted that it was not open to Shri Sachar to seek a revision of the earlier decision of the Tribunal in the case of Sanghvi Enterprises. In this connection he referred to an earlier order of the Tribunal in which it had been observed that the correctness of an earlier order could be challenged only in the appropriate forum and not before the Tribunal itself.

8. We have carefully considered the submissions made. It is obvious that the present case is squarely covered by the ratio of the Tribunal's order dated 18-4-1985 in the other case of the same appellants. The ground on which Shri Sachar sought to persuade us to take a different view was that the decision of the Tribunal in the case of Sanghvi Enterprises was wrong, and that the observations made in this regard in the previous order dated 18-4-1985 were not correct. We have given due consideration to Shri Sachar's submissions, but we find no reason to hold that the decision of the Tribunal in the case of Sanghvi Enterprises needs re-examination. We also endorse the observations made in the Tribunal's order dated 18-4-1985 and referred to in para 5 above. Shri Sachar's proposition that a residue or by-product in the nature of a new excisable product could arise only in the course of manufacture of a new main commodity, although it is an interesting proposition, still remains unsupported by any technical or judicial authority. Instead of holding, on the basis of this unsupported proposition, that the decision of the Tribunal in the case of Sanghvi Enterprises was wrong, we can more appropriately hold, on the basis of the considered decision of the Tribunal in the case of Sanghvi Enterprises, that Shri Sachar's proposition is wrong. We also find that the example given in the order dated 18-4-1985 to controvert Shri Sachar's proposition is quite apposite, and is not answered by bringing in the final product in the DCM case, namely vegetable product, which emerges at a much later stage.

9. In the result, we find no reason to depart from the view taken by the Tribunal in its order dated 18-4-1985 in the case of the present appellants. We hold that the sawn timber valued at Rs. 6,36,482.73 should be excluded for the purpose of applying the ceiling of Rs. 20 lakhs in terms of Notification No. 80/80, and that the appellants should be given the consequential relief. The appeal is allowed in these terms.


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