Customs, Excise and Gold Tribunal - Delhi
The Singareni Collieries Co. Ltd. vs Collector Of Central Excise on 1 February, 1988
Equivalent citations: 1988(15)ECC311, 1988(17)ECR600(TRI.-DELHI), 1988(34)ELT671(TRI-DEL)
JUDGMENT V.T. Raghavachari, Member (J)
1. Notice dated 15.12.1981 was issued to the appellants, M/s. Singareni Collieries Co. Ltd., as to why duty should not be demanded from them Under Rule 9(2) of the Central Excise Rules on the sawn Paratty and saw dust cleared by them during the period 1976-77 to 1980-81 and why penalty should not be imposed on them in that connection. After receipt of reply the Collector of Central Excise, Hyderabad adjudicated on the matter and under order dated 24.3.1982 held that duty was payable but limited the demand to the six months period preceding the notice. He did not impose any penalty. The revision petition preferred against the said order to the Central Board of Excise and Customs is, on transfer, the deemed appeal before us.
2. We have heard Shri D.N. Mehta, advocate for the appellants and Shri Sachar for the department.
3. Before us Shri Mehta contended that the sawn Paratty and saw dust are not excisable products manufactured by the appellants and so no duty could be demanded thereon. His further contention was that in any event these goods were not excisable for the reason that they would fall under Item 68-CET but exempted under Notification No. 47/81-C.E., dated 1.3.1981 till the same was rescinded subsequently and further under notifications 85/79, 46/81 and 92/81. Shri Sachar controverted all these submissions.
4. We will have to first determine whether the two products (sawn Paratty and saw dust) are excisable products on which duty of excise could be demanded. It is only if the answer to this question is in the affirmative that the further question of exemption under the several notifications would have to be considered.
5. We were informed that sawn Paratty consisted of pieces of wood that emerged, apart from saw dust, at the time of sawing of logs. The appellants purchase logs of timber for being sawn into smaller pieces for use as support for the roof in the underground mines. It is in the process of sawing of the logs in the manner abovesaid that sawn Paratty and saw dust comes to existence. It is admitted that part of the said product is used up by the appellants and part thereof is disposed of for a price. It is with reference to the above admitted facts that the answer to the question stated earlier has to be arrived at. We have taken note of the fact that this Tribunal has held in Sangvi Enterprises (1984 Vol. 16 ELT 317) that saw dust is an excisable product falling under Item 68 CET but not sawn timber. The Tribunal again held in the case of Surma Valley Saw Mills (P) Ltd. (1985 Vol. 21 ELT 478) that sawn Timber would not be an excisable product, the reason being that even after sawing timber remains timber only. The appellants, further rely on the decision in the case of Collector of Central Excise, Indore v. M.P. Veneer and Plywood (P) Ltd. (1986 Vol. 23 ELT 255) where . the issue related to certain portion of sawn timber which contained knots, flowery grains, cracks etc. and were, therefore, not suitable for manufacture of veneers and were being cleared from the factory as timber waste. Shri Mehta submitted that paratty would be covered by this case. We are not convinced with this argument since the above said waste was found by the authorities to be useable for manufacture of wooden furniture though not veneers. It, therefore, appears that the product in the said case was not in the nature of waste pieces of small size, as paratty is said to be.
6. But Shri Mehta contended that the decisions noted earlier would not be good law after the decision of the Delhi High Court in the case of M/s. Modi Rubber Ltd. (1987 Vol. 29 ELT 502). He pointed out that the Delhi High Court held in the said decision that rubber scrap, arising during the course of manufacture of tyres as well as scrap arising out of destruction of tyres found not marketable, would not be an excisable product. The Delhi High Court held that though this scrap would, and did, fetch a price in the market that would not for that reason make it an excisable product since the manufacturers of tyres did not intend to manufacture the scrap and the scrap arose inspite of anxiety to avoid the same. Shri Mehta submits that similarly in the present instance also the appellant did not intend to manufacture saw dust or paratty but that the said products emerged in the course of sawing the timber logs. As Shri Mehta put it, the appellant would very much desire to avoid the emergence of these products if they could by any means do so but that they arose inevitably in the course of sawing the timber logs. He pointed out that following the said judgment of the Delhi High Court this Tribunal held in the case of Gayatri Glass Works [1987 (33) ELT 124 (Tribunal)], departing from its earlier decision, that broken glass (Bhagad) would not be an excisable product. Shri Sachar contended that the sawn paratty and saw dust would be in the nature of by-products and would therefore be liable for duty as manufactured articles in terms of the decision of the Supreme Court in the. DCM case (1977 ELT 199). His submission was that in the said judgment the Supreme Court held Soap stock, emerging as a by-product in the course of manufacture of vegetable product, an excisable article. We do not find that the Supreme Court had held so in the said judgment. The judgment was that the refined oil (arising as intermediate product during the manufacture of vegetable products) was also an excisable product. We are, therefore, unable to accept the submission that the judgment of the Delhi High Court was contrary to the ratio laid down by the Supreme Court.
7. Therefore, following the decision of the Delhi High Court we hold that in the present instance also the sawn paratty and saw dust, which are in the nature of scrap arising during the course of the sawing of the timber logs, are not excisable products since they cannot be said to have been manufactured by the appellants.
8. In view of the above conclusion it is unnecessary to consider the other submissions regarding the applicability of the exemption notifications in respect of these products.
9. We, therefore, allow this appeal and set aside the orders of the Collector with consequential relief, if any.