DECORATIVE LAMINATES (INDIA) PVT. LTD.versusCOLLECTOR OF CENTRAL EXCISE, BANGALORE

          DECORATIVE LAMINATES (INDIA) PVT. LTD.                             A
                                   v.
       COLLECTOR OF CENTRAL EXCISE, BANGALORE

                             JULY 31, 1996

             [S.P. BHARUCHA AND K.T. THOMAS, JJ.]                            B

     Central Excise :

       Central Excise Tariff Act, 1985-Cltapter 44 of the Schedule-Commer-
cial Plvwood--{Jndertaking process of applying-Phenol Formaldehyde
Resin-Exemption from duty on the ground that process unde1taken was not
                                                                             c
mam1facture--Duty already paid before processing-Exemption refused-
Held, Benefit of exemption cannot be claimed as end product is entirely
different after processing.

      The appellant company was engaged in processing commercial             D
plywood. The Assistant Collector of Central Excise issued notice to the
appellant company that non-slip plywood is liable to Excise Duty. The
Collector of Central Excise (Appeals) confirmed the order of the Asst.
Collector and dismissed the appeal filed by the appellant. Hence this
present appeal.
                                                                             E
      Dismissing the appeal, this Court

      HELD : 1 The Tribunal has found that the plywood purchased by
the appellant on processing has turned into a new commercial product
acquiring a different identity. Hence no scope for contending that the end
product is not a different commodity. The fact finding authority has         F
correctly concluded that the end product is distinctly different from what
it was before the processing was done on it. (211-G-H; 213-A)

     Laminated Packings (P) Ltd. v. Collector oj Central Excise, (1990) 49
ELT 326, relied on.                                                          G
      Gujarat Steel Tubes Ltd. and Another v. State of Kera/a and Others,
(1989] 3 SCC 127; Collector of Customs & Central Excise and Another v.
01iental Timber Jndusflious, [1985) 3 SCC 85 and Collector of Central
Excise, Bombay v. Popular Cotton Cove1ing Works, (1994) 73 ELT 264,
referred to.                                                                 H
                                   209
    210                   SUPREME COURT REPORTS [1996] SUPP. 4 S.C.R.

A           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3775 of
    1989.

         From the Judgment and Order dated 27.6.89 of the Customs Excise
    and Gold Control Appellate Tribunal, New Delhi in Order No. 170 of
    1989-B.
B
            V. Sridharan and V. Balachandran for the Appellant

            J. Vellapally, P. Parmeshwaran for the Respondent.

            The Judgment of the Court was delivered by
e         THOMAS, J. This appeal is in challenge of an order passed by the
    Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) repell-
    ing the contention of the appellant that the commodity 'commercial
    plywood' processed by the appellant is not liable to excise duty as the duty
    was paid for the plywood before its processing.
D
           The case of the appellant - company is the following. Appellant is
    engaged in processing commercial plywood by applying Phenol Formal"
    dehyde Resin under 100 per cent heat and pressure and coats the plywood
    with wire mesh, either on one side or on both sides so as to make it slip
E   proof commercial plywood. The product is mostly used in body building of
    vehicles or for flooring etc. On 3.9.1986, the Assistant Collector of Central
    Excise issued show cause notice to the appellant company, in which it was
    stated that since non-slip plywood is a different product it is liable to duty
    as falling under sub-heading 4408-90 (Chapter 44 of the Schedule to the
    Central Excise Tariff Act, 1985). Appellant in the reply has explained that
F   commercial plywood was once subjected to duty and hence cannot again
    be made .dutiable merely on the strength of the processing done by the
    appellant. The processed commodity does not become a different product
    nor the processing exercise a manufacture according to the appellant.
    Some earlier proceedings, which culminated in refunding the duty collected
G   on such. products when the department later realised that no duty was
    chargeable on such commodity, have also been relied on by the appellant
    to bolster up its stands.

         The Assistant Collector took the view that the slip-proof commercial
    plywood (made after carrying out the processing work) is a different
H   product and so is liable to duty under the relevant sub-heading of the
     DECORATIVELAMINATESv. CGLLECTOROFC.E.[TIIOMASJ.]                  211

Schedule to the Act.                                                          A

      Collector of Central Excise (Appeals) confirmed the said order of
the Assistant Collector • CEGAT by the impugned order has concurred
with the said finding and dismissed the appeal filed by the appellant.

                                                                              B
       Learned counsel for the appellant first contended that since the
department took a view in the earlier proceeding (which culminated in the
order passed in 1985) that no new product was emerging from the process-
ing done by the appellant the same benefit has to be afforded to the
appellant now also. We are not disposed to decide the question merely on
the strength of the stand which the Assistant Collector had adopted prior     c
to 1985. Then counsel invited our attention to the advice tendered by the
Board of Central Excise in 1975 that "duty should be charged at the
plywood stage as commercial plywood and subsequent alterations etc.
should be ignored" (vide CBE & C Bulletin for January • March, 1975).
Such an advice is irrelevant in dealing with the tariff prescribed in 1985.
                                                                              D
      CEGAT has considered the factual position whether the process of
applying Phenol Formaldehyde Resin on plywood is only a nominal process
which does not affect the identity of the commodity or whether it is a
substantial process resulting in the emergence of a new commercial
product. According to the CEGAT, answer to the question whether any E
particular processing would result in the emergence of a new commercial
product depends on various factors like · to what extent the value is added,
whether the product is prepared for a separate use. In the case of non-slip
plywood, after coating it with Phenol Formaldehyde Resin and pressing it
with enroller, the department took the view before the CEGAT that it F
becomes a new product, CEGAT accepted the aforesaid stand of the
department and found that application of Phenol Form~ldehyde Resin
results in the emergence of a new commercial product.

       Learned counsel for the appellant contended before us that no real
change takes place on the plywood despite subjecting the article to heat G
and pressure to apply the Resin and coating it with wire mesh. But in the
light of the .finding of the Tribunal that the plywood which appellant
purchased has turned into a new commercial product acquiring a differ.en!
identity there is no scope for contending that the end product is not a
different commodity.                                                      H
    212                    SUPREME COURT REPORTS (1996] SUPP. 4 S . C.R.

A          Learned counsel for the appellant tried to seek support from the
    decision of this Court in Gujarat Steel Tubes Ltd. and Anr.. v. State of Kera/a
    and Ors., (1989] 3 SCC 127. In the sales tax proceedings taken against the
    petitioners in that case it was contended that galvanised iron pipes and
    tubes are a commercially different commodity from steel tubes. This Court
    pointed out that the purpose of galvanising the steel pipe is merely to make
B   it weather-proof.

           Nor does the decision in Collector of Customs & Central Excise and
    Anr. v. 01iental Timber Indus/lies, [1985] 3 SCC 85, cited before us by the
    learned counsel afford any useful support to the appellant's contention.
c   The question considered therein was the stage at which the plywood used
    for manufacturing plywood "circles became liable to excise duty. In Collec-
    tor of Central Excise, Bombay v. Popular Cotton Cove1ing W01*s, (1994) 73
    ELT 264, the contention raised by the assessee was that the works done by
    hbn for winding cotton or fibre-yant on the elect1ic wire does not aniount lo
D   manufactw·e of a new product. 171e contention was upheld by this Court on
    the basis of the finding anived at by CEGAT that no new co1111ne1cially
    recognised a1ticle distinct froni electlic ivire hus co111e into existence. It was
    pointed out in the decision that the excise auth01ities did not lead any
    evidence to establish that winding cotton or fibre glass yanz upon e/ect1ic 1vire
    would bring about a new conunercially recognised alticle. Those decisions,
E   therefore, do not help the petitioner.

          Shri Joseph Yellappally, learned senior counsel who argued for the
    respondent, cited the decision of this Court in Laminated Packings (P) Ltd.
    v. Collector of Central Excise, (1990) 49 ELT 326, and submitted that the
F   ratio herein has a far greater bearing on the issue involved in the case.
    The question considered therein was whether lamination of kraft paper
    with polyethylene would amount to manufacture. The Collector (Appeals)
    had taken the view that lamination process on duty paid kraft paper would
    not invite duty again. But this Court held that lamination amounts to
    manufacture as it involves a ·process for bringing into existt;nce a different
G   commodity distinct from kraft paper. Sabyasachi Mukherji, 0, has ob-
    served in that decision that "laminated kraft paper is distinct, separate and
    different commodity known in the market as such from the kraft paper".
    Their Lordships did not agree with the contention of the counsel that since
    duty was paid on kraft paper and since no change in the essential character
H   or user of the paper had been brought to the commodity it cannot be
     DECORATIVELAMINATESv. COLLECTOR OF CE. [IBOMASJ.]                 213

subjected to duty once again. We agree with the learned counsel that the A
position in this case is not very different from the above case. That fact
finding authority has correctly concluded that the end product is distinctly
different from what it was before the processing was done on it.

         We find no merit in the appeal, and accordingly we dismiss it. No
costs.                                                                       B

S.V.K.I.                                                Appeal dismissed.