Per P.C. Jain :

Short question involved in these matters is whether friction cloth arising at the intermediate stage in the course of manufacture of TR belting, V Belts and Conveyor Belts is liable to duty or not. It is not disputed that the friction cloth is utilised captively for manufacture of the aforesaid types of belts.

1.1 Assistant Collector concerned has given a finding that the said friction cloth is not marketable on the basis of thorough market enquiry made by him as referred to in the order-in-original. The Revenue, however, challenged the said order of the Assistant Collector on the ground that under the new TH 59.05 describing the goods as "Rubberised textile fabric" specifically covers friction cloth inasmuch as it is a rubberised fabric as indicated from the process of manufacture and therefore, the question of marketability does not arise when the Tariff itself mentions the same as excisable product. This plea of the Revenue against the order-in-original was accepted by the lower appellate authority holding as follows in the bunch of appeals of the assessees:-

"I have considered the grounds of appeal of the Deptt. I find that the Deptt. is mainly placing reliance on the statutory entry of the goods in question i.e. friction cloth under sub-heading 5905.10. The Deptt. is mainly stressing that this entry in the C.E. Tariff makes friction cloth statutorily excisable and has submitted that non-marketability of friction cloth does not come in the way of excisability of the goods and respondents' arguments and A.C.'s findings in this regard are not at all sustainable. I agree with the grounds given by the Deptt. and I also agree with the Deptt. that the earlier decision of Punjab Haryana High Court on this matter related to the old tariff where under specific entry for this item did not exist and therefore the decision had nothing to do with the excisability of the item in the new tariff. The respondent's plea that the goods being not marketable, are not excisable cannot be accepted in view of the specific entry of the goods in the new tariff. I, therefore, allow the appeal of the Deptt."

On the other hand, in the appeal of the Revenue, the lower appellate authority has held as follows:-

"This view point was again upheld by the Double Bench of the Hon'ble High Court in the case of Union of India Vs. Punjab Rubber Allied Inds. reported as 1992 (58) ELT 409 (PH) wherein the appeals filed by the Union of India were dismissed and upheld the view taken by the learned the single Judge in the earlier case reported as 1984 (16) ELT 57 (PH) and also held that friction cloth produced at intermediate stage in production of transmission Rubber Belting, V-Shaped belts and conveyor Belts not rubberised cotton cloth fabrics and is not marketable and thus friction cloth is no eligible to duty in spite of amendment in rule of Central Excise Rules, 1944 as this does not conform to the description of rubberised cotton fabrics.

After giving the matter due careful consideration and in view of the above reported judgments of the Hon'ble High Court of Punjab Haryana, it is held that 'Friction Cloth' as discussed in detail above does not conform to the description of Rubberised Cotton Fabrics and duty is not leviable on this product. It, therefore, accept the appeal and not set aside the impugned order of Assistant Collector."

2. We have heard the learned advocates for different parties as also the learned JDR, Shri V.M. Udhoji for the Revenue.

3. We have carefully considered the pleas advanced from both sides. We have thus two sets of findings, one finding of Collector (Appeals) holding that the product is not marketable and reliance on High Court of Punjab Haryana Division Bench's judgment reported in 1984 (16) ELT 57 (PH) holding that the product friction cloth is not excisable.

3.1 On the other hand, in the bunch of six appeals of the assessees the Commissioner (Appeals) holds that marketability is not a necessary criterion whe