MADRAS RUBBER FACTORY LTD Vs. RUBBER BOARD

JUDGEMENT

(1.) IN this third round of challenge, Excise duty, levied and sought to be collected as a cess under the Rubber Act, 1947, confirmed in appeal by the District Judge and affirmed by a learned single judge of this court, is still in challenge in this Writ Appeal. The assessee is the Madras rubber Factory, a Company incorporated under the Companies Act and engaged in the manufacture of tyres. The assessments and demands cover the period from 1-4-1975 to 30-9-1979.

(2.) THE Company purchased scrap rubber from owners of rubber estates. THE scrap was sent to the millers. THE millers converted scrap rubber into a more purified and dried form of rubber, the crepe. This crepe was used in the manufacturing process by the Company. THE Rubber Board assessed the company on the total quantity of the scrap rubber purchased by the Company and not on the crepe rubber which alone, according to them, was used in their manufacturing process. THE Board took the view that scrap rubber is rubber as defined under the Act and excise duty is levied on the rubber produced by an owner of an estate or used by the manufacturer. It is their case that the acquisition of scrap rubber was for its use in the manufacture of tyre and conversion into crepe is only a preparatory process for manufacture. It is also their stand that scrap rubber and crepe rubber are both included in the definition of rubber under the Act and when the Company converts scrap into crepe, it cannot restrict its liability on the lesser weight of crepe but has to pay duty on the entire quantity of scrap which it purchased. THE Company, on the other hand, contends that their liability is only to pay duty on the rubber used by them in the manufacture of tyre and when crepe rubber is used for this purpose, the quantity of crepe so used alone can attract duty. Alternatively it is contended that scrap rubber contains moisture, dirt and other impurities and crepe is only dried, purified rubber. Thus the rubber content in scrap alone is exigible to duty and this content of rubber in scrap is measured by the quantity of crepe obtained. We shall advert in detail to these contentions with reference to the scheme and object of the legislation and the relevant decisions on the subject.

(3.) LATEX also gets dried up on the tapping panel (tree lace) and the collection cups (shell scrap ). LATEX spilt or overflowed on the ground also gets dried (earth scrap ). Normally 10 to 20 per cent of the total crop constitute the tree lace, shell scrap and earth scrap.