Customs, Excise and Gold Tribunal - Delhi
Parshuram Iron And Steel Rolling Mills ... vs C.C.E. on 9 September, 1996
Equivalent citations: 1997(89)ELT535(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. This is an appeal filed by M/s. Parasuram Iron & Steel Rolling Mills Pvt. Ltd., being aggrieved with the order-in-original dated 30th September, 1987 passed by the Collector of Central Excise, Pune.
2. The matter relates to the eligibility of the rolls for captive use exemption. The appellants were bringing forged rolls and were subjecting them to machining and finishing and were using such rolls in their lathe machines which were a part of their rolling mill for manufacturing iron and steel products like flats, etc. The forged rolls were received from outside and were classifiable under Item No. 25(8) of the old Central Excise Tariff and under Heading No. 72.08 under the new Tariff. On machining and finishing the finished rolls before their use in the rolling mill were classifiable under Item No. 68 of the old Central Excise Tariff and under Heading No. 84.55 of the new Tariff. For the period from 1-8-1982 to 28-2-1986 the appellants claimed exemption under Notification No. 118/75-C.E., dated 30-4-1975. From 1-3-1986 to 31-12-1986 they had claimed exemption under Notification No. 281/86-C.E., dated 24-4-1986 read with the provisions of Central Duties of Excise (Retrospective Exemption) Act, 1986 (No. 45/86), dated 12-8-1986. The adjudicating authority had taken a view that the Notification No.ll8/75-C.E. was not applicable to machinery and that the parts of the machinery were also not eligible for captive use exemption. He had held that the machined rolls were liable to appropriate rate of duty and were not eligible for exemption relating to captive use.
3. The matter was heard on 9-9-1996, when Shri L.B. Attar, advocate, briefly stated the facts of the case and submitted that for the period 1-1-1982 to 18-2-1986 they were eligible for exemption under Notification No. 118/75. The expression used in the second Proviso to that Notification is "complete machinery manufactured in a factory". It was his submission that the machined rolls could not be considered as complete machinery, therefore, their goods were not hit by the exclusion clause. For the period 1-3-1986 to [31-12-1986], they were eligible for exemption under Notification No. 281/86-C.E., dated 24-4-1986 and that this exemption notification has been given retrospective effect by the provisions of the Central Duties of Excise (Retrospective Exemption) Act, 1986. As the Government's intention was to cover the exemption given on 24-4-1986 from 1-3-1986 itself, he submitted that the benefit of captive use exemption should not be denied to them. He referred to the Tribunal's decision in the case of Bajrang Alloys Ltd. v. Collector of Central Excise, Raipur -1994 (70) E.L.T. 624 (Tribunal), wherein the Tribunal had held that M.S. Rolls manufactured out of rough or unmachined rolls being used for repair and maintenance of machinery namely, rolling mill installed in factory, were eligible for benefit of Notification No. 281 /86.
4. In reply, Shri M. Jayaraman, JDR, submitted that the issue of the retrospective exemption had not been raised before the lower authorities and that the forged roll being an essential component of the machinery and the machines being used for producing or processing of the goods, such rolls were excluded from the purview of exemption under Notification No. 118/75-C.E. and that as the goods were not manufactured in a workshop, they were not eligible for exemption under Notification No. 281 /86-C.E. also.
5. We have carefully considered the submissions. It is not disputed that the machined rolls were used in the factory of the manufacturer and that the rolls as such were not the complete machinery. The learned advocate had explained that the rolls were used for replacement and the goods in question were not the original equipment brought initially for producing or processing of the goods. Under exemption Notification No. 118/75-C.E., dated 30-4-1975 all goods falling under Item No. 68 of the old Central Excise Tariff manufactured in a factory and intended for use in the factory in which they are manufactured, or in any other factory of the same manufacturer, were exempt from the whole of the Central Excise Duty. In this case, the machined rolls were manufactured in the factory and were classifiable under Item No. 68. They were used in the factory in which they were manufactured. Under second Proviso it had been provided that the exemption will not be available to "complete machinery manufactured in a factory and meant for producing or processing any goods". The machine rolls could not be considered as complete machine. As to what is a machinery, there are a number of authoritatiye pronouncements by different authorities including the Larger Bench decision in the case of Union Carbide India Ltd. v. Collector of Central Excise, Calcutta-II -1996 (86) E.L.T. 613. It cannot be said that the machined rolls as such were either a machinery or a complete machinery.
6. In view of the above, we consider that for the period 1-1-1982 to 28-2-1986, the appellants were eligible for the benefit of exemption Notification No. 11-8/75-C.E.
7. Now coming to the period 1-3-1986 to 31-12-1986, under Notification No. 281/86, dated 24-4-1986 all excisable goods manufactured in a workshop within a factory and intended for use in the said factory or in any other factory of the same manufacturer, for repairs or maintenance of machinery installed therein, were exempted from the whole of excise duty. This Notification No. 281/86-C.E., dated 24-4-1986 had come up for consideration before the Tribunal in the case of Pratap Steel Rolling Mills v. Collector of Central Excise, Indore -1995 (25) ETR 615, wherein the Tribunal by the majority decision had held that the rolls used for captive consumption would be said to have been utilised for repair or maintenance of the machinery and were entitled for exemption in terms of Notification No. 281/86-C.E., dated 24-4-1986. The Tribunal had observed that the rolls would not be equated with a rolling mill which alone was a complete machinery and which alone would perform the operation for which it was designed. The rolls by themselves could not perform the manufacturing operation and hence they were not machinery.
8. This exemption Notification No. 281/86-C.E., dated 24-4-1986 was issued under Sub-rule (i) of Rule 8 of the Central Excise Rules, 1944. Under the Central Duties of Excise (Retrospective Exemption) Act, 1986 as passed by the Parliament retrospective effect had been given to the exemption notification issued on or after the 3rd March, 1986 and before 8th of August, 1986. The purpose of this retrospective effect was to maintain the effective rate of duties at the level obtaining prior to 28-2-1986 notwithstanding the changes brought about by the new tariff i.e. tariff under the Central Excise Tariff Act, 1985. It was provided that in respect of such exemptions notification shall be deemed to have effect from 1st March, 1986.
9. The learned JDR had submitted that this plea of the appellants was not raised before the adjudicating authority and he had not dealt with the same. We consider that it is a legal plea and there is no doubt that the exemption Notification No. 281/86-C.E. was covered by the scheme of the retrospective exemption, aforesaid. The matter is very old, the appeal being of the year 1987. In the interest of justice, we have gone through the legal provisions and are satisfied that the appellants were eligible for exemption under Notification No. 281/86-C.E. from the period 1-3-1986 to 31-12-1986.
10. Taking all the relevant considerations into account, we vacate the impugned order-in-original and accept the appeal. Ordered accordingly.