M/S. Super Rubber Enterprises vs Commissioner Of Central Excise

[Arising out of Order-in-Original No. 56/GRM/PCK/2006 dated 17.2.2006 passed by the Commissioner of Central Excise (Appeals), Delhi III, Gurgaon)]

For approval and signature:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Super Rubber Enterprises Appellants

Vs.

Commissioner of Central Excise Respondent

Panchkula

Appearance:

Shri Naveen Mullick, Advocate for the Appellants

Shri R K Grover, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran, Member (Technical)

Date of Hearing /decision: 15.09.2015

FINAL ORDER NO. 52966 /2015-EX(DB)

Per B Ravichandran:

The appellants are engaged in the manufacture of V belts subjected to Central Excise duty. They availed benefit of small scale exemption under notification No. 85/85-CE dated 17.3.85. During the course of manufacture of v belts, an intermediary product rubberized friction cloth emerges. Proceedings were initiated against the appellant on the ground that value of friction cloth manufactured and captively consumed in the manufacture of v belts have to be added to the value of v belts cleared to arrive at aggregate value of clearance. Following such calculation, the appellants were found to be not eligible for benefit of SSI exemption Notification No. 85/85 for the year 1985-1986. The original authority dropped the demand against the appellant following various case laws and concluding that friction cloth is not excisable and not dutiable. On appeal by the department, learned Commissioner (Appeals) vide his order dated 17.2.2006 set aside the original order and allowed the appeal filed by the Revenue. He relied on the Honble Apex Court order in the case of Punjab Rubber & Allied Industries reported as [1999 (105) ELT 3 (SC)] and Boards Circular dated 1.12.1998. Aggrieved by the said order, the appellant is before us.

2. The appellants pleaded that friction cloth produced by them has already been held as non-excisable by this Tribunal and there is no ground to take a contrary view. The friction cloth obtained by them is neither marketable nor marketed in view of its composition and shelf life. The learned Counsel for the appellants relied on the following case laws:

A) CCE, Chandigarh vs. Asian Rubber and Plastic Industries [2000 (123) ELT 760 (T) as confirmed by Honble Supreme Court as reported in [2001 (134) ELT A 246];

B) Hindon Rubbes Pvt. Ltd. vs. [1997 (93) ELT 332 (All)] as confirmed by Honble Supreme Court in [1998 (102) ELT A 225 (SC)] wherein SLP filed against the said order was dismissed by the Honble Supreme Court for delay.

He further argued that Honble Supreme Court decision in the case of Punjab Rubber & Allied Industries (supra) is not directly relevant to the present case. The Honble Supreme Court observed that unless there was clear finding recorded on the contention of marketability of the commodity, the Division Bench of the High Court was not justified in preventing the department from requiring the industries to take out an L 4 license. The learned Counsel for the appellants submitted that there is no finding regarding the excisability of friction cloth in the said order. Hence, the learned Commissioner (Appeals) reliance on the said order to confirm the demand against them is untenable.

3. Learned AR on the other side reiterated the finding of the lower authorities.

4. Heard both sides and examined the appeal records.

5. Though the counsel for the appellant argues on the question of correctness of the calculation of value of friction cloth, we find that appeal can be decided on the main point of excisability of friction cloth itself. We find that this Tribunal in the case of Asian Rubber and Plastic Industries (supra) held that friction cloth arising at the intermediate stage in the case of manufacture of v belts and conveyor belts is not a marketable product as the Revenue has not discharged the burden of proving the marketability of said product. We find that Civil Appeal filed by the Revenue against the said order has been dismissed by the Honble Apex Court [2001 (134) ELT A 246].

6. Similarly, we find that Honble High Court of Allahabad in the case of Hindon Rubbes Pvt. Ltd. (supra) held that rubberized cotton fabric which is also known as friction cloth is not goods and hence not subjected to excise levy. We find that this Tribunal vide Final Order No. 993-1005/1999 C dated 22.11.99 in the case of Metro Tyres Ltd. and others examined the same issue and held that rubberized fabric is not goods for the purpose of Section 3 of Central Excise Act and hence there is no question of excise levy on the same. The Civil Appeal filed against the Tribunals order has been dismissed by Honble Supreme Court on 11.8.2000.

7. Considering the above position, we find that the impugned order passed by learned Commissioner (Appeals) is not sustainable. As rubberized friction cloth is not subjected to central excise levy, the question of adding the value of such goods for arriving at the turn over for SSI exemption purpose does not arise. Accordingly, we allow the appeal with consequential benefit, if any.

( operative part of the order pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

( B Ravichandran )

Member(Technical)

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