Customs, Excise and Gold Tribunal - Bangalore
Elofic Industries Ltd. vs Commissioner Of Customs on 17 June, 2004
Equivalent citations: 2004(96)ECC469, 2004(176)ELT553(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Appeal No. 43/99-Cus, dtd. 3.3.99 by which the Commissioner has noted that the Auto Clipping Machine imported by the appellant does not produce any commodity by itself and therefore the benefit of Notfn. No. 11/97 dtd. 1.3.97 cannot be extended to them. The finding recorded by the Commissioner in Para 4 to 7 is reproduced.
"4. The only issue to be decided in this appeal is whether the Auto Clipping Machine is a machine for production of commodities. As per the appellants themselves "the machine is useful for clip/seal the side ends of pleated filter paper" used in the manufacture of filters. The activity of clipping/sealing of side ends of the pleated filter paper cannot be said to be "production of commodities". In the case of Venkataramana Hatcheries v. CTO (66 STC 154 AP) it has been held that 'commodity' is a term used in a commercial sense and means any movable and tangible thing that is ordinarily produced or used as a subject of sale. A commodity is also described as anything which is useful, specifically, an article of merchandise; anything moveable that is bought and sold as goods, ware, produce of land and manufacture (New Websters' Encyclo Dictionary 1980 Ed.). The above description of commodity makes it clear beyond any doubt that the clipped/sealed side ends of pleated filter paper cannot be considered as commodity. This is because by itself the clipped/sealed side ends of pleated filter paper cannot be a subject of sale; it is, by itself, not useful; nor is it an article of merchandise; nor is it bought and sold as goods, ware or produce of land. In view of the above, the Auto Clipping Machine cannot be called machinery for production of commodities. Consequently, the concession under Notfn. No. 11/97-Cus. dtd. 1.3.97 (Sl. No. 143) cannot be extended, as rightly held by the Assistant Commissioner.
5. Order No. 2227/97 dtd. 6.8.97 of Hon'ble Tribunal in the case of Karuna Aqua Farms is of no help to the appellants. Though the issue relates to extension of concessional rate of duty for machinery for importation of commodities, what was imported in that case was not Auto Clipping Machine but Pond Aerators used in Aqua Farms for shrimp production.
6. In view of the above facts and findings, in my considered view, the Order passed by the Assistant Commissioner, ICD, is correct, proper and legal and requires no interference.
7. Accordingly, Order-in-Original No. 258/97 dtd. 4.6.97/26.8.97 passed by the Assistant Commissioner of Customs, ICD, Bangalore, is upheld and the appeal bearing No. 143/97-Cus filed by M/s. Elofic Inds. Ltd. is rejected."
2. We have heard Ld. Counsel, Shri Shivadass for the appellants and Ld. SDR, Shri P.M. Saleem for the Revenue.
3. Ld. Counsel Shri Shivadass pointed out that the functions of the machine imported is to clip/seal both the side ends of the pleated paper according to the printed pamphlet. The steel clip coil is fed to the machine for sealing both the edges of the clipping filter paper, which automatically bends the steel clip and cut to size. They stated that the steel clipped paper has both the edges produced by the said machine as an essential part or component or intermediate product of the final product of filters. They admit in the appeal memo that as such it is not marketable and cannot be sold as goods or wares. He submitted that the item can be considered as commodity although it is not marketed the hence the benefit of notification should be extended. He pointed out that the Tribunal in the case of CC v. Dura Foam Industries (P) Ltd., 1986 (10) ECC 44 (T): 1986 (26) ELT 341 has extended the benefit to a machine known as automatic circular stacking and splitting machine which cuts foam blocks and makes those block marketable. He likewise relied on the judgment rendered in the case of Camlin Pvt. Ltd. v. CC, 1997 (90) ELT 128 wherein the machine designed for production of a commodity was ferrules and rubber tips setting machine which was a machine by which rubber tips to pencils were fed to it. It was noted that unless the rubber is attached to the pencil, the pencil is not marketable and on that ground the benefit was extended.
4. Ld. SDR distinguished both the judgments and pointed out that the machine should produce a commodity, which is marketable as held in the citations relied by the Counsel. He submitted that even in terms of their own submissions in the appeal memo, the machine only does the function to clip/seal the edges of the paper and the same is not marketable and hence it is not a commodity. He relied on the judgment rendered in the case of Maharashtra Glass and Agro Ltd. v. CCE, 2001 (132) ELT 283 wherein washing and drying machine (horizontal) imported for washing and drying glass and glass articles was held to be not a machine meant for production of commodities and hence the benefit was not extended. He further relied on the ratio of the judgment rendered in the case of Food Specialities Ltd. v. CC, Bombay, 1997 (94) ELT 112 (Tri), wherein sifter was used only for sifting coffee granules according to their sizes in a machine though connected with production of a commodity, but it itself did not result in production of a commodity and it merely helped in the marketing of a commodity. Therefore, the benefit was not extended. Ld. SDR also relied on the judgment rendered in the case of Lakhanpal National Ltd. v. CC, Bombay, 1997 (90) ELT 307 (Tri.), wherein also it was found that the three machines imported namely paste pouring machine, bobbin insertion machine and capping machine which had independent function and carrying out one process in series of manufacturing process and did not produce any commodity by itself and hence benefit was not extended.
5. We have carefully considered the submissions and have perused the impugned order, which has also been extracted. In terms of the ratio of the judgments cited by both the sides it is clear that the machine should produce a commodity, which should be marketable. Admittedly the function of machine in the present case as stated in the appeal memo itself is to clip/seal both side ends of the pleated paper. The steel clip coil is fed to the machines for sealing both the ends of the pleated filter paper, which automatically bends the steel clip and bent to sizes. They themselves admit that the item is not marketable and cannot be sold as goods or ware. Therefore, in terms of the ratio of the judgment cited by both sides it is not a commodity as it is not marketable and not sold. The Commissioner has rightly noted the definition of commodity as appearing in the case of Venkataramana Hatcheries v. CTO, 66 STC 154 AP and as appearing in New Websters' Encyclo Dictionary 1989 Edition. In view of the fact that the imported machine does not produce a commodity and that too marketable on the benefit of notification has been rightly denied. There is no merit in this appeal and the same is rejected.