Customs, Excise and Gold Tribunal - Delhi
Hindustan Everest Tools Ltd. vs Collector Of C. Ex. on 29 February, 1996
Equivalent citations: 1996(84)ELT362(TRI-DEL)
ORDER
S.K.Bhatnagar, Vice President
1. This is an appeal against the order of the Collector (Appeals), New Delhi dated 14-12-1992.
2. Learned representative Shri Ramesh Gupta stated that they are manufacturers of hand tools and issue involved in this case is as to whether the copper wire used in the process is eligible to the benefit of MODVAT under Rule 57A as input.
3. Learned rep. of the appellants further stated that they purchased Copper wire on payment of duty and used it in the process of electroplating. In the electroplating process, the copper wire works as an anode i.e. as a conductor of electric current. With the help of copper wire working as anode, the hand tools are electroplated from the chemical mixture. The copper wire is also electroplated alongwith the hand tools and the electroplated copper wire cannot be used further in the same process as an anode and the same has to be abondoned as scrap. Therefore, the life of this copper wire is limited to one time current flow which is used in plating one lot of hand tools. The copper wire is thus used as a consumable item in the process of electroplating of hand tools done in relation to the manufacture of hand tools.
4. The A.C. had, however, rejected their contention. Therefore, they appealed to the Collector. The Collector has also rejected their petition. Hence, this appeal.
5. In response to queries from the Bench with reference to the Order-in-Original, the learned representative of the appellants explained that the copper wire is used to hang the tools and simultaneously used for passing the electric current.
6. In response to other queries from the Bench, learned representative stated that he is not a technical man and therefore, he may be allowed to consult the technical person and file the technical material.
7. The learned representative was, therefore, given an opportunity and time to show from technical write-up or literature that the copper wire in this case also acted as an anode as claimed by them and was an input and was not hit by exclusion clause under Rule 57A. Accordingly, the learned representative subsequently filed extracts from the Hand Book of Electroplating and brought Shri A.S. Shekhawat, Officer (Electroplating) of his factory. Shri Shekhawat explained that copper wire is used for passing electricity to a chain of hand tools which are dipped in solution and acts as cathode.
8. However, when faced with the extract from the above book titled Chapter 9 'General Principles of Electroplating', which the representative said was applicable in their case, they admitted that the copper wire does not act as anode and as per this extract; And it is the article (hand tool) to be electroplated immersed in the solution which acts as cathode.
9. Learned representative Shri Ramesh Gupta further argued that in any eventuality, the copper wire was to be considered as an input as it was being used in relation to the manufacture of the finished product and it could not be considered as a tool or an appliance as under Central Excise Tariff, copper wire is not classifiable as tools or appliances. In this connection, it was his contention that the tariff structure was required to be kept in view for the purposes of determining whether a thing could be considered as a tool or an appliance. In this connection, he would like to rely upon Calcutta High Court's decision in the case of Singh Alloys & Steel Ltd. v. Assistant Collector of Central Excise reported in 1993 (66) E.L.T. 594 (Cal.) and the Tribunal's order in the case of J.B.S. Capacitors v. Collector of Central Excise, Bhubaneshwar reported in 1995 (79) E.L.T. 131 (Tri.). He further re-emphasized that the copper wire breaks after one operation and therefore, is required to be replaced every time and therefore, is consumable input.
10. Learned Jt. CDR Shri Joginder Singh stated that he would like to draw attention to the order of the Collector (Appeals) in which he has clearly spelt out the process in para 5 in particular and has mentioned, inter alia, that the tools manufactured by the appellants'factory are electroplated by suspending them within the electroplating mixture by the copper wire and once current is passed, the nickel gets deposited on the tools thus making them electroplated. He has drawn attention to the definition of "Electroplating" as given in the Condensed Chemical Dictionary 8th Edition as revised by Gessner G. Hawley and held on that basis that it is the item to be electroplated which acts as an electrode from the above definition and therefore, rightly held that it was incorrect to say that the copper wire is an anode. This has now been admitted by the Technical Officer himself that it does not act as an anode.
11. As observed by the learned Collector, the copper wire works as a mechanism or an appliance for suspending the article and for passing the current to the article so that electroplating process is carried out.
12. It was also his submission that the case law cited by the learned representative of the appellants was distinguishable.
13. The learned representative reiterated the appellants' view-point.
14. I have considered the above submissions. I observe that the relevant extracts of Canning Handbook on Electroplating (Chapter 9) reads as follows:-
"Electrodeposition is the application of metallic coatings to metallic or other conductive surfaces by eletrochemical processes.
The article to be electroplated is immersed in a solution containing dissolved salts of the metal to be depossited and made the cathode by connecting it to the negative lead of a low voltage D.C. supply. To complete the electrical circuit anodes are immersed in the solution and these are connected to the positive lead. Current from the D.C. supply is carried through the external circuit by electrons ((electronic conduction) to the plating bath. In the bath electrolyte, current is carried by ions (electrolytic conduction). At an electrode surface, charge (as electrons) is transferred between ions in solution and the electrodes; the same total charge per unit time flowing through both anode and cathode. The potential applied between anode and cathode is the driving force for the transfer of charge across the metal solution interface, and amongst other things its value determines the rate of charge transfer. This potential for many commercial deposition processes is usually between 2 and 16 volts D.C. applied between anode and cathode and derived from a transformer-rectifier set or a generator. For small laboratory scale opiating, accumulators or dry cells may be used."
This in itself shows that the appellants' submissions before the lower authorities were factually and technically incorrect. In the case of electroplating, which was admittedly done in accordance with the general principles of electroplating, as enumerated in Chapter 9 of the aforesaid book, the article to be electroplated acts as a cathode and not as an anode. In fact, it was wrong on the part of the apellants to make an attempt to mislead the authorities below. Even at the Tribunal stage, this technical material has been filed by them after the learned representative had been directed to do so and therafter, Technical Officer of the applicants had to accept, in the face of the above literature that the hand tools dibbed in the solution act as a cathode.
15. The Technical Officer, however, could not show with the help of this literature or otherwise that even the copper wire in question also acts as a cathode.
16. The wire being that of copper could naturally transmit electricity; However, in the present case, it was being used as an implement to hang the tools (in the form of chain or otherwise) and enable them to be dibbed in the chemical solution. Therefore, this part of the appellants' submission is correct that the copper wire is used to hang the tools, In this connection, Webster's Ninth New Collegiate Dictionary shows the position as follows:-
"Implement, an article serving to equip, a tool or utensil forming part of equipment for work, one that serves as an instrument or tool."
"Equipment. 1. the set of articles or physical resources serving to equip a person or thing: as (1): the implements used in an operation or activity: APPARATUS (2): all the fixed assets other than land and buildings of a business enterprise (3): a the rollling stock of a railway b: a piece of such equipment 2 a: the equipping of a person or thing b: the state of being equipped 3: mental or emotional traits or resources."
Thus, it is evident that the copper wire which is being used to hang the tools for dipping them in the solution could be rightly described as an implement used in the operation.
17. Here, we are not concerned as to whether in the process, the nickel also gets deposited on the copper wire as well because that is not relevant for the purpose and is merely incidental to or inveitable consequencce of method or process adopted. In these circumstances, the fact that the copper wire breaks after one operation and is required to be replaced every time is not relevant even if it its thus consumed.The fact that in the Central Excise Tariff, it is not classifiable under the Chapter/Headings meant for tools is also not relevant insofar as this case is concerned because copper wire is an article of multiple uses and in which case it will get classified as a conductor and in which case it will fall under some other heading will depend on the facts of a given case. Here, it is being used as an implement and therefore, is hit by the exclusion clause in the notification. In other words, even if it was an input which got consumed in the process, it will still not be liable for the benefit of the notification in view of the exclusion clause. The cases cited by the representative of the appellants do not help their cause in view of the above factual position. I, therefore, see considerable force in the arguments of the Learned Joint C.D.R. and hold that the learned Collector was right in his conclusion that the appeal was liable to be rejected. Accordingly, the impugned order is confirmed and the petitioner's appeal is rejected.