ORDER
Shiben K. Dhar, Member (T)
1. This Appeal is directed against Order-in-Original No. 6/87, dated 31-12-1986 of Collector of Central Excise, Cochin.
2. Duty of Rs. 2,02,860/- has been confirmed as payable by the Appellants on the ground that they do not fulfil the condition clause 2 of the Notification No. 83/83, dated 1-3-1983 since the goods of masticated rubber and the tread rubber manufactured during the previous year exceeded the exemption limit under clause 2 of the aforesaid notification.
3. Arguing for the Appellants Ld. Counsel submits that masticated rubber is an intermediate product made from natural rubber and no process of manufacture such as would result in a taxable event, is involved. In their case no chemicals are added and simply by mastication natural rubber is converted into masticated rubber and identity between the two is not lost. In support of his contention he cites the case C.C.E., Cochin v. Ceakay Rubber Industries reported in 1988 (35) E.L.T. 491 (T) wherein Tribunal held that Masticated rubber made out of natural rubber by the process of mastication does not amount to manufacture within the meaning of Section 2(f) of Central Excises and Salt Act, 1944. The Tribunal in this case has also relied upon the decision rendered by the Kerala High Court on 9-11-1987 on a batch of matters filed by Padinjarekara Rubber Industries and Ors. (Original Petition No. 9180/82 and Ors.) where the High Court held masticated rubber was nothing but natural rubber and that by the process of mastication natural rubber did not change its character nor have the products become substantially different from natural rubber. In a similar decision of Kerala High Court reported in 1993 (65) E.L.T. 480 in the case of Superintendent of Central Excise v. Ancher Treads Pvt. Etd. wherein the Court held masticated rubber is only semi-processed material arising in the course of manufacture of rubber tyres and it is not marketable and not to be considered as goods manufactured to attract excise duty. He submitted that the quantity of masticated rubber produced in the previous year cannot be added to the quantity of tread rubber to determine their exemption limit. He also submits that apart from merits of the case the demand is clearly time-barred. The period involved is 21st January, 1985 to 2nd March 1985 and the show cause notice was issued on 28-10-1985. They have filed necessary declaration in this regard. Collector in the impugned order however has said that declaration was not received in his office though the Ld. Counsel submits that the fact that copy of the declaration was included in the seized documents itself would prove that the declaration had been sent Ld. D.R. on behalf of the Revenue reiterated the departmental arguments adding that in case of exemption the onus is on the claimants.
4. We have heard both sides Ld. Counsel submits that in their case no chemical was added and what was involved was a mere process of mastication. In the view of this matter, even though there is an earlier order in Appeal No. ED(SB)(T) 1383/82C at page 36 of the Paperbook which goes against the appellants, that case in our view is distinguishable since in that case certain chemicals were added. Since the Ld. Counsel further submits that no chemical has been added in the impugned goods in their case and there is no rebuttal to the contrary we are of the view that the Tribunal’s subsequent decision in case of C.C.E. v. Ceakay Rubber Industries – 1988 (35) E.L.T. 491 (T) would apply to the facts of the case. In this case the Tribunal held that masticated rubber made out from natural rubber, merely by process of mastication does not involve manufacture. Reliance was also placed on the decision of the Kerala High Court in the case of Padinjarakara Rubber Industries and Ors. (Original petition No. 918 /92 and Ors.and Ors.) where by subsequently Kerala High Court in the case of Superintendent of Central Excise v. Ancher Treads Pvt. Ltd. – 1993 (65) E.L.T. 480 again reiterated that masticated rubber cannot be regarded as goods manufactured as there is no market anywhere in the world [where] masticated rubber can be bought or sold. It is only in the nature of semi-processed material, a stage in the process of manufacture rubber bag and therefore masticated rubber cannot be considered as goods produced or manufactured to attract excise duty. Apart from merit the demand is clearly time-barred since the Collector himself referred to the argument that declaration is available in the assessee’s document. In view of this therefore we hold that Masticated Rubber as produced does not amount to manufacture and therefore the quantity of such masticated rubber could not be included in tread rubber to determine the exemption in terms of clause 2 of Notification No. 83/83, dated 1-3-1983. In the result, we set aside the impugned order and allow the appeal.