K.L. Rekhi, Member (T)

1. The point of dispute that falls for decision in this case relates to tariff classification and the rate of central excise duty applicable to laminated jute bags. The lower authorities have held that laminated jute bags fell under the residuary item No. 68 of the Central Excise Tariff. The appellants have urged that these goods be classified under item 22A relating to jute manufactures. The dispute relates to the period from 1-3-1975 to 5-6-1979. With effect from 6-6-1979, laminated jute bags falling under item No. 68 of the Tariff became fully exempt from duty under notification No. 204/79-CE, dated 6-6-1979.

2. The subject laminated jute bags were manufactured out of jute fabrics laminated with paper, the two being bonded together with the help of bitumen. In the laminated condition, the jute content predominated. In holding that the laminated jute bags fell under item No. 68 of the Tariff, the lower authorities have relied on the Calcutta High Court judgments reported at A.I.R. 1970 Cal. 491 -Dalhousie Jute Company Limited v. Union of India (judgment by single judge) and the judgment of the Division Bench dated 14-8-1975 in the same case when the matter was taken up in appeal in the same High Court by the Union of India (Appeal No. 515 of 1971-Union of India v. The Dalhousie Jute Company Ltd.). The learned representative of the department reiterated the same stand during the hearing before us. The appellants have relied on an earlier order of this Tribunal in the case of Mahakali Plastic Weave Private Ltd.-1983 E.L.T. 2064 (CEGAT) in which laminated products composed of bitumen bonded layer of paper and jute (jute being predominant in weight) were classified under item No. 22A. They cited two other orders of the Tribunal relating to jute pack sheets and high density polyethylene sacks to buttress their case but since the products involved in these two cases were found to be quite different, we observed that these decisions were not relevant to the issue. Thereafter, the appellants made the following three-fold submissions :-

(1) In the aforesaid cases relating to M/s. Dalhousie Jute Company, the Single Judge of the Calcutta High Court had held, and thereafter the Division Bench confirmed, that though laminated jute bags were new goods, they continued to remain within item No. 22A but they were not chargeable to duty a second time under item 22A. Dalhousie Jute Company cases were in the context of lamination of duty-paid jute fabrics brought from outside. The Division Bench of the Calcutta High Court left the question of classification of laminated jute bags open if such bags were manufactured in an integrated process within the same factory, i.e., not out of duty-paid jute fabrics brought from outside.

(2) The alternative plea of the appellants was that laminated jute fabrics, prior to their conversion into bags, fell under item 22B relating to coated/laminated textile fabrics but under this item they were exempt under notification No. 100/77-C.E., dated 3-6-1977. When converted into bags, such bags fell under Item 68 but no duty was payable because of exemption notification No. 179/77-C.E., dated 18-6-1977 since they had not used power in stitching the bags. The appellants maintained that item 68 was concerned only with the last stage of operation i.e., conversion of fabrics into bags and the use of power in the appellants' factory upto the stage of manufacture of fabrics was not relevant. If this view was not taken, the appellants would stand discriminated against vis-a-vis a manufacturer who may be buying laminated jute fabrics from some one else and then converting such fabrics into bags.

(3) If complete exemption was denied to the appellants, at least the demand raised by the show cause notice dated 7-6-1979 for the period 1-3-1975 to 5-6-1979 should be reduced substantially on the ground of limitation. Though the demand had been raised and confirmed by the Assistant Collector under Rule 9(2),