Customs, Excise and Gold Tribunal - Delhi
Arya Filaments (P) Ltd. vs Commissioner Of C. Ex. on 15 September, 2004
Equivalent citations: 2005(180)ELT140(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal, filed by M/s. Arya Filaments (P) Ltd., is whether the benefit of Notification No. 3/2001-CE., dated 1-3-2001, is available in respect of vacuum gas filled bulbs of retail price not exceeding Rs. 20/- per bulb.
2. Shri A. Upadhayay, learned Advocate, submitted that the appellants, are manufacturing tungsten wire and tungsten filament and vacuum gas filled bulbs falling under Chapters 81 & 85 of the Schedule to the Central Excise Tariff Act; that they availed of the Modvat credit of the duty paid on the inputs used in or in relation to the manufacture of tungsten filament/tungsten wire; that since 1999-2000, they also started manufacturing vacuum gas filled bulbs for which a separate hall had been constructed by them in the same factory premises; that they discharged duty liability whenever tungsten wire/tungsten filament are captively cleared to their bulb unit; that as they were paying Central Excise duty on tungsten filament/tungsten wire; which are used as inputs for the manufacture of bulb in respect of which no Modvat credit is availed of by them, they took the benefit of Notification No. 3/2001-C.E., dated 1-3-2001; that they also used Nitrogen Gas Shell, Aluminium Caps and other inputs in the manufacture of vacuum gas filled bulbs, which are specified inputs and they do not avail any Modvat credit on the duty paid on these inputs; that, despite non-availment of Modvat credit on any inputs which have gone into the manufacture of vacuum gas filled bulbs, the Commissioner under the impugned Order has disallowed the benefit of Exemption Notification No. 3/2001, confirmed the demand of duty and imposed penalty holding that they are availing input stage credit. The learned Advocate contended that the appellants have not taken any Modvat credit on any input used in the manufacture of vacuum gas filled bulbs; that tungsten filament is an independent product and Modvat credit taken in respect of inputs used in the manufacture of tungsten filament cannot debar them from availing the exemption in respect of vacuum gas filled bulbs.
3. Countering the arguments, Mrs. Neeta Lal Butalia, learned S.D.R., submitted that tungsten filament is used in the manufacture of vacuum gas filled bulbs; that it is admitted fact that the appellants are availing the benefit of Modvat credit in respect of inputs used in the manufacture of tungsten filament, which, in turn, is used in the manufacture of bulbs; that, thus, it cannot be claimed by them that the Modvat credit is not availed in respect of vacuum and gas filled bulbs of retail sale price not exceeding Rs. 20/- per bulb; that the said bulbs are partially exempted from payment of duty subject to the condition that no credit of the duty paid on inputs or capital goods, exclusively used in the manufacture of these goods, has been taken; that as the appellants are taking the Modvat credit of the duty paid on inputs, which finally go in the manufacture of bulbs, they are not eligible for the benefit of this notification.
4. We have considered the submissions of both the sides. It is not in dispute that the appellants are taking the Modvat credit of the inputs. The main contention raised by them is that the inputs, in respect of which they are availing the Modvat credit, are used in the manufacture of tungsten filament which is a separate commodity and the use of modvatable inputs in the manufacture of tungsten filament will not debar them from taking the benefit of the concessional rate of duty provided under Notification No. 3/2001 (serial No. 262) in respect of vacuum and gas filled bulbs. We do not find any force in these submissions of the learned Advocate. It is not denied by them that tungsten filament is used by them in the manufacture of bulbs in question. As the tungsten filament is used in the manufacture of bulbs, it cannot be claimed by them that the tungsten filament is not manufactured during the process of vacuum and gas filled bulbs merely because some parts of filament are sold out in the open market. Merely because the tungsten filament comes into existence before the bulbs come into existence, it does not mean that they are not part and parcel of the process of manufacture of the bulbs in question. It has been held by the Larger Bench of the Tribunal in the case of Shri Ramakrishna Steel Industries Ltd. v. C.C.E., [1996 (82) E.L.T. 575 = 1996 (13) RLT 162] that the inputs, which are not used in the main stream of the manufacturing process, but in another stream of manufacturing something which is to be used for rendering final product marketable or used otherwise in assisting the process of manufacture, it is reasonable to conclude that those inputs are used in the manufacture of final product. In the said matter before the Larger Bench, the appellants were manufacturing steel castings and machinery parts and the dispute was relating to the availment of Modvat credit on the inputs which have been used in the manufacture of sand moulds, which in turn were used in the manufacture of steel castings. The Larger Bench of the Tribunal has relied upon the decision of the Supreme Court in the case of J.K. Cotton Spg. and Wvg. Mills Co. Ltd. v. Sales Tax Officer, Kanpur, 1965 (16) STC 563 wherein the Supreme Court has held that manufacture of goods should normally encompass the entire process carried on by the dealer of converting raw material into finished goods and where any particular process is so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient; that process would fall within the expression "in the manufacture of goods". The Larger Bench has also referred to the decision of the Supreme Court in the case of C.C.E. v. Eastend Paper Industries Ltd., 1989 (43) E.L.T. 201 (S.C.) wherein it was held that anything that enters into and forms part of manufacturing process or is required to make the article marketable must be deemed to be raw-material or component part of the end-product and must be deemed to have been used in completion or manufacture of end product. Thus, the Larger Bench of the Tribunal held that the Modvat credit in respect of inputs used in the manufacture of moulds will be available to the appellants manufacturing steel castings. Following the decision of the Larger Bench of the Tribunal, which itself followed the judgment of the Supreme Court, we hold that the inputs, which have gone into the manufacture of tungsten filament, have been used in or in relation to the manufacture of vacuum and gas filled bulbs. As the appellants have availed of the Modvat credit in respect of those inputs, the condition of the notification has not been fulfilled. Accordingly, the benefit of Notification No. 3/2001 will not be available to the appellants. In view of this, we uphold the demand of duty confirmed by the Commissioner under the impugned order. As the appellants have claimed the benefit of the Notification in their classification declaration filed by them, no penalty is imposable. We, therefore, set aside the penalty imposed on them. The appeal is disposed of in these terms.