Friction cloth, being an intermediary stage in the manufacturing process and not a marketable or exchangeable good, is not subject to excise duty under the Central Excise Act, 1944, even after the amendments to Rules 9 and 49 of the Central Excise Rules, 1944.

, J.

1. The learned Single Judge posed the question--"whether friction cloth/rubberised cloth produced at an intermediate stage in the production, by a composite, uninterrupted and continuous process of Transmission Rubber Belting, V-shaped Belts and Conveyor Belts is exigible to Central Excise Duty?"- - and answered it in the negative. Aggrieved by the decision, the Union of India has filed these three Letters Patent Appeals, viz. L. P. A. Nos.343, 344 and 345 of 1985. None has appeared on behalf of the appellant to argue the appeals. Unaided by the appellant, we are deciding these three appeals on merits.

2. The respondents herein are manufacturing transmission rubber belting, V-shaped and conveyor belts. The process in the words of the learned Single Judge is as under: "the petitioners are manufacturers and dealers of T. R. belting, V-shaped and conveyor belts. In order to manufacture these goods, the raw rubber, both natural and synthetic is compounded with various chemicals to make a master batch which is in the form of a sheet. This sheet is like a soft paste and is used in various forms in making a cushion compound, in impregnation or ply lamination. For the manufacture of the flat transmission belts the selected grade of cotton canvas is impregnated with the rubber paste in different consistency by Rolling the Paste in the fabric under pressure on a Calender Machine. The fabric thus impregnated with the rubber paste forms a ply inter-layer. The fabric thus treated-impregnated with the rubber paste is piled into layers to give a requisite thickness. While preparing this pile the thin sheet of rubber compound as described above is placed as inter-layers. The pile thus formed in required thickness is steam-heated in Hydraulic Press to heat cure. The piled curd sheets of laminated piles are cut to size for ultimate conversion into flat transmission belts. The process of manufacture of V-Belts is almost similar to the process of flat transmission belts with the exception that it requires more compound to provide cushion and is shaped into a V-shape. The impregnation of fabric with rubber paste is an in-step operation. "

3. The point for consideration is as to whether or not the cotton canvas impregnated with the rubber paste which has been described as friction cloth is classifiable as rubberised cotton fabric and thus exigible to excise duty? The appellant seems to suggest that the impregnation of the canvas cloth with rubber compound is a process of rubberisation of cotton fabric. On behalf of the respondents, Mr. R. L. Batta maintains that friction cloth is not an excisable good; it is not marketable or exchangeable as such and cannot, therefore, be subjected to excise duty.

4. In Punjab Rubber Allied Industries V/s. Union of India and Ors. , 1983 (12) ELT 54, a Division Bench of this Court held that the process of manufacture of transmission rubber belting/v-shaped belts and conveyor belts involved a composite, integrated and uninterrupted process and if friction cloth comes into existence at an intermediary stage, the department is not justified in demanding excise duty as the product could not be used or sold in the market as such. To take away the effect of this decision which was rendered in September 1981, Rules 9 and 49 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) were amended in February, 1982. It is in the light of amendments that the claim of the appellant as raised in these appeals has to be examined. The relevant provisions of the Act and the Rules deserve to be noticed. These are extracted below: "section 2 (d) - "excisable goods" means goods specified in the Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt;" "section 2 (f)- "manufacture" includes any process, (i) incidental or ancillary to the completion of a manufactured product; and (ii) which is specified in relation to any goods in the Section or Chapter notes of t