Case: Hindustan Polymers Company Limited and Others Vs. Collector of Central Excise, Guntur

1. The appellants manufacture polystyrene. It is of a natural colour. Some of this natural coloured polystyrene is given different colours by the appellants2. The appellants were issuede notices by the Assistant Collector of Central Excise which stated that both natural colour polystyrene and the corresponding coloured grain had been classified under Tariff ItemA (1) (ii). Thee notice added that it is evident that coloured polystyrene compounds which were modified forms of polystyrene are outside the scope of the Tariff ItemA (1) (ii). It is now proposed to classify them under the residuary TI 68 after7 under RuleB of the Central Excise Rules, 1944 and demand duty at the appropriate rate under the said Tariff Item 68 for the period from0 to 310 under Rule 9 of the Central Excise Rules, 1944 read with SectionA of the Central Excises and Salt Act, 1944. a3. The demand was contested until the stage of the Tribunal. It was noted in the judgment and order of the Tribunal, which is under appeal, that the appellants had filed voluminous documents to substantiate their contention that uncoloured polystyrene and coloured polystyrene were the same product and, by colouring polystyrene, no new goods emerged. The allied contention in the Tribunals words was that polystyrene, even after being coloured, continued to fall under Tariff ItemA (l) (ii). On behalf of the Revenue, the learned Senior Departmental Representative stated to the Tribunal that he had no comments to make on the appellants contention that polystyrene, which was a polymer, would continue after colouring to fall under Tariff ItemA (1) (ii) and not under Tariff Item 68. He stated that the appellants were paying excise duty on the uncoloured polystyrene which was cleared from their factory. The dispute was only in regard to the uncoloured polystyrene which was captively consumed by the appellants in their colouring plant within the factory. The question now was whether excise duty should be chargeable at the coloured stage when it was cleared from the factory after colouring or at the uncoloured stage, as it was captively consumed in the factory in their colouring plant. The duty in such a case was chargeable on the value of the coloured polystyrene which was cleared from the factory and not at the uncoloured stage. The Tribunal was competent to mould the relief as the circumstances of the case demanded and the Revenue would have no objection if the Tribunal directed that the demand from the appellants should not exceed the demand which would have been leviable under Tariff Item 68. The Tribunal agreed and held that the demand that coloured polystyrene be classified under Tariff Item 68 could not be e sustained. It "moulded the relief" and ordered" (i) Duty demand for the period within limitation would be quantified under Tariff Item 68; (ii) Demands or duty for the goods would then be worked out under Tariff Item 1A (1) (ii)Demand raised against the appellants for the periods within limitation, as set out above, would not, in any case, exceed the duty demand that the appellants would have been liable to pay for the period under limitation if the goods were classifiable under Tariff Item 68. To be more explicit, duty demands would be restricted to the period within limitation and the amount that would have been quantifiable under Tariff Item 68 though they have to be worked out on the basis of Tariff ItemA (l) (ii) of the Central Excise Tariff as it stood at the material time. Rest of the demand is set aside." *

Reasoning:
6. While we appreciate the Tribunals desire to do complete justice and mould the relief in that direction, we think that, in the circumstances, the Tribunal should not, in this case, have passed an order which proceeded upon a basis that is altogether different from that of the demand made upon the appellants. That is not "moulding" relief. The demand that was made upon the appellants was under Tariff Item 68 an4 it proceeded upon the basis that there was a process of manufacture of coloured polystyrene from C uncoloured polystyrene. Having come to a conclusion against the Revenue on these counts, the appropriate order for the Tribunal to have passed was to have set aside the demand and left it open to the Revenue to proceed against the appellants, as permissible under the law. The appellants would then have had the opportunity of meeting the precise case made out by the Revenue