LAMINATED PACKINGS (P) LTD.versusCOLLECTOR OF CENTRAL EXCISE, GUNTUR

A                   LAMINATED PACKINGS (P) LTD.
                                        v.
            COLLECTOR OF CENTRAL EXCISE, GUNTUR                                ~

                               AUGUST 6, 1990
B
       [SABYASACHI MUKHARJI, CJ. AND K.N. SAIKIA, JJ.]

        Central Excises and Salt Act, 1944: Section 2(f)-"Manufacture" .
  -Lamination of duty paid kraft paper with polyethylene-Resultant pro-
  duct whether "manufactured" and dutiable-Criteria-Mark~t parlance ~
  -Goods with distinct, separate and identifiable function-Coming into
C being.

          Words and Phrases: "Manufacture"-Meaning of.

        To a question whether lamination of duty paid kraft paper with         ~
D polyethylene resulting in 'polyethylene laminated paper' would amount
  to 'manufacture' and excisable under Excise Law, the Collector of Cent-
  ral Excise (Appeals) answered in the negative, and held that the appel-
  lant was eligible to claim refund of duty paid by it. In reaching this
  finding he followed the decision in Standard Packagings, Ne/lore v. Union
  of
   .                  .
     India, [1984] ECR 2635 AP.
E        Against the said order, the Collector of Central Excise preferred
    an appeal before the Customs, Central Excise and Gold (Control)
    Appellate Tribunal. The Tribunal reversed the order of the Collector
    (Appeals) and held that the appellant was liable to duty.

          Aggrieved, the appellant has preferred this appeal under Section
F   35-L(b) of the Central Excises and Salt Act, 1944. It was contended that
    duty was already paid on kraft paper and there was no change in the
    essential characteristic or the user of the paper after •amination, and
    that both the goods belong to the same entry.

          Dismissing the appeal,
G
          HELD: I. I. By process of lamination of kraft paper with poly-
    ethylene different goods come into being. Laminated kraft paper is
    distinct, separate and different from the kraft paper. Lamination,
    indisputably by the well-settled principles of excise law, amounts to      ;--
    manufacture. [632C,D]
H


                                      630
        LAMINATED PACKINGS v. COLLECTOR [MUKHARJI, J.]                631

      1.2. 'Manufacture' is bringing into being goods as known in the        A
excise laws, that is to say, known in the market having distinct, separate
and identifiable function. [632F]

      1.3. Even if the goods belong to the same entry, the goods are
different identifiable goods, known as such in the market. If that is so,
manufacture occurs, and if manufacture takes place, it is dutiable. [632F]   B

     Empire Industries Ltd. & Ors. v. Union of India & Ors., [1985] 3
SCC 314 and Collector of Central Excise, Kanpur v. Krishna Carbon
Paper Co., [1988] 37 ELT 480, relied on.

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2335                    c
of 1989.

     From Order No. 766/88-C dated 24.10.1988 of the Customs
Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal
No. B/847 /85-C.
                                                                             D
      V. Sreedharan, N.M. Poppli and V.J. Francis for !he Appellant.

      Ashok H. Desai, Solicitor General, Ms. Randharangaswami @d
P. Parmeswaran for the Respondent.

      The Judgment of the Court was delivered by                             E

      SABYASACHI MUKHARJI, CJ. This is an appeal from the
order of the Customs, Excise & Gold (Control) Appellate Tribunal
(hereinafter called 'the CEGAT') dated 24th October, 1988 under
section 35-L(b) of the Central Excises & Salt A.ct, 1944 (hereinafter
referred to as 'the Act').                                                   F

      The appeal which the CEGAT disposed of had been filed by tJ:ie
Collector of Central Excise, Guutur against ti!~ order of the Collector
of Central Excise (Appeals), Madras dated 6th February, 1985. The
short question which arises in this appeal is whether the lamination of
duty paid kraft paper with polyethylene resulting in 'polyethylene           G
laminated kraft paper' would amount to 'manufacture' and excisable
under law or not. It appears that t!le Collector (Appeals) in his order
following his earlier order in respect of the appellant herein had taken
the view that polyethylene laminated or coated kraft paper obtained
from duty paid kraft paper is not liable to duty again.
                                                                             H
    632                    SUPREME COURT REPORTS             [1990] 3 S.C.R.

A         The Collector of Central Excise. (Appeals), Madras had followed        I
    the decision of the Division Bench of Andhra Pradesh High Court in           ~
    the case of Standard Packagings, Ne/lore v. Union of India, [1984] ECR
    2635 (AP) for reaching the aforesaid finding and held that the appel-
    lant would be eligible to claim refund of duty paid by them in this
    regard.
B
          Lamination, indisputably by the well settled principles of excise
    law, amounts to 'manufacture'. This question, in our opinion, is
    settled by the decisions of.this Court. Reference may be made to the
                                                                                     ,__
    decision of this Court in Empire Industries Ltd. & Ors. v. Union of
    India & Ors., [1985] 3 SCC 314. Reference may also be made to the
c   decision of this Court in Collector of Central Excise, Kanpur v.
    Krishna Carbon Paper Co., [1988] 37 ELT 480. We are, therefore, of
    the opinion that by process of lamination of kraft paper with polye-
    thylene different goods come into being. Laminated kraft paper is            ~



    distinct, separate and different goods known in the market as such
    from the kraft paper.
D
        Counsel for the appellant sought to contend that the kraft paper
  was duty paid goods and there was no change in the essential
  characteristic or the user of the paper after lamination. The fact that
  the duty has been paid on the kraft paper is irrelevant for considera-
  tion of the issue before us. If duty has been paid, then benefit of credit     ~         ~

E for the duty paid would be available to the appellant under rule 56-A
  of the Central Excise Rules, 1944.

        The further contention urged on behalf of the appellant that the
  goods belong to the same entry is also not relevant because even if the
  goods belong to the same entry, the goods are different identifiable
F goods, known as such in the market. If that is so, the manufacture
  occurs and if manufacture takes places, it is dutiable. 'Manufacture' is
  bringing into being goods as known in the excise' laws, that is to say,
  known in the market having distinct, separate and identifiable func-
  tion. On ths score, in our opinion, there is sufficient evidence. If that is
  the position, then the appellant was liable to pay duty. We are, there-
G fore, clearly of the opinion that the order of the CEGAT impugned in
  this appeal does not contain any error. The appeal, therefore, fails and
  is accordingly dismissed.

           There will, however, no order as to costs.

    G.N.                                                   Appeal dismissed.