Wood Crafts Products Ltd. vs Union of India (UOI) and Others

A.K. Patnaik, J.—The petitioner No. 1 is engaged in production of wood and articles of Wood falling under T.I. 16-B of the First Schedule to the Central Excise & Salt Act, 1944. In the manufacture of Plywood, layers of veneers are glued together by means of synthetic Resin such as urea Formaldehyde Resin (for short UF Resin). and Phenol Formaldehyde Resin (for short PF Resin). The petitioners purchased the raw materials for the manufacture of solution of U.F. Resin and P.F. Resin and produced the said two solutions for captive use in their factory for the manufacture of Plywood. By order dated 12.9.90 (Annexure-4), the Assistant Collector, Customs and Central Excise, Dibrugarh held that the solutions of U.F. and P.F. Resin used by the petitioners in their factory for manufacturing plywood and plywood products were correctly classified under T.I. 15-A of the First Schedule of the Central Excise and Salt Act, 1944 for the period 1.3.81 to 28.2.86 and were also liable to excise duty. By the said order dated 12.2.90 (Annexure 4), the Assistant Collector, Customs and Central Excise, Dibrugarh directed the petitioners to submit classification list and price list in respect of solution of U.F. and P.F. Resin for the period from 1.3.81 to 28.2.86. Aggrieved by the said order dated 12.9.90 (Annexure-4), the petitioners have filed this writ petition.

At the time of hearing of this writ petition, Mr. R. Gogoi, learned counsel for the petitioners, submitted that since the solutions of U.F. and P.F. Resin were not marketable goods and were captively used in the factory, they were not chargeable to excise duty u/s 3 of the Central Excise & Salt Act, 1944, Mr. K.K. Mahanta, learned C.G.S.C. on the other hand, contended that the solutions of U.F. & P.F. Resin are marketable goods and the Petitioner No. 1 is liable to pay excise duty on the said goods and the mere fact that the said two items are used captively by the petitioner No. 1 for manufacturing plywood in its factory will not save the said goods from excise duty because excise duty was payable on the manufacture or production of goods whether sold or not.

A copy of the judgment dated 2.5.2000 in W.A. Nos. 449 & 452/97 in the case of Arunachal Plywood Industries Ltd. and Jayashree Tea Industries Ltd. passed by the Division Bench of this Court has been produced by Mr. R. Gogoi in support of his aforesaid contention. From a reading of the said judgment dated 2.5.2000 of the Division Bench in the said two cases, it appears that the Division Bench following the decisions of the Apex Court in Moti Laminates Pvt. Ltd. and Others Vs. Collector of Central Excise, Ahmedabad, and Union of India and another Vs. Delhi Cloth and General Mils Co. Ltd. and another, has rejected the two appeals filed by the respondent-Union of India after holding that U.F. and P.F. Resin solutions which were used for manufacturing plywood in the factories of Arunachal Plywood Industries Ltd. and Jay Shree Tea Industries Ltd. were not marketable goods and therefore would not be liable to excise duty under the Central Excise & Salt Act, 1944.

Following the said judgment of the Division Bench of this Court delivered on 2.5.2000 in W.A. Nos. 449 & 452/97 in the case of Arunachal Plywood Industries Ltd. and Jayashree Tea Industries Ltd., I dispose of this writ petition by holding that the solutions of U.F. and P.F. Resin used for manufacturing Plywood by the petitioners in their factory not being marketable goods are not liable to excise duty under the Central Excise & Salt Act, 1944 and therefore the petitioners are not obliged under the aforesaid Act, 1944 and the Rules made there under to include the said two items in the classification list and the price list for the period 1.3.81 to 28.2.86.

The impugned order dated 12.9.90 (Annexure-4) of the Assistant Collector, Customs and Central Excise, Dibrugarh is accordingly quashed. Considering the facts and circumstances of this case, the parties shall bear their own costs.