Customs, Excise and Gold Tribunal - Delhi
Jain Spun Pipe Co. vs Collector Of Central Excise on 15 May, 1992
Equivalent citations: 1992(62)ELT753(TRI-DEL)
ORDER P.K. Kapoor, Member (T)
1. These appeals arise out of the orders passed by the Collector of Central Excise (Appeals), New Delhi. Since identical issues are involved in these cases, both the appeals are disposed of by this common order.
2. The appellants are engaged in the manufacture of Cement Spun Pipes and Collars falling under sub-heading 68.07 of the Schedule to the Central Excise Tariff. The Appellants were availing deemed MOD VAT credit on re-rollable material obtained by them from the maraket in terms of Order No. 347/1/88-TRU, dated 1-6-1987 issued by the Ministry of Finance under Rule 57G(2). The re-rollable material after being subjected to rolling process was drawn into wire in the appellants factory for being used along with cement concrete mixture for the production of cement spun pipes. In the impugned order dated 30-4-1991 the Collector (Appeals) held that deemed credit on re-rollable materials received by the appellants was not admissible in terms of Rule 57D(2) since 'wire' drawn out of such material was in itself a final product and could not be deemed to have come into existence as an intermediate product during the course of the manufacture of cement spun pipes.
3. On behalf of the appellants we heard the learned consultant Shri P.S. Bcdi. He stated that in the declaration filed under Rule 57G the appellants had stated that the re-rollable material received by them would be used as input for the manufacture of spun pipes falling under sub-heading 68.07 of the Schedule to Central Excise Tariff Act, 1985. He added that in terms of Order No. F. 347/1/88-TRU, dated 1-6-1989 issued by the Ministry of Finance under Rule 57G(2) deemed credit on re-rollable material was admissible. He added that even though wire produced from the rollable materials received by the appellants was exempted from duty in terms of Notification No. 217/86, dated 2-4-1986 (as amended), deemed credit could be availed by the appellants in terms of Rule 57D(2) in respect of the re-rollable material since wire was an intermediate product which comes into existence during the course of manufacture of cement spun pipes.
4. On behalf of the Revenue the learned SDR Shri G. Bhushan referred to the Order F. No. 347/1/88-TRU, dated 1-6-1989 issued by the Ministry of Finance under the second proviso to Rule 57G(2) and staled that credit of duty on re-rollable material received by a manufacturer could be availed provided it is used in the manufacture of any final product falling under Chapters 72 & 73 of the Schedule to the Central Excise Tariff Act, 1985. He contended that the appellants final product being cement spun pipes falling under sub-heading 68.07 of the Tariff the concession in terms of the order dated 1-6-1989 issued by the Ministry of Finance was not admissible to them.
5. The short point that arises for consideration in this case is whether deemed credit of duty would be admissible in respect of re-rollable materials used as input in the manufacture of wire which is used as an exempted input in the manufacture of final product, namely, cement spun pipes.
6. We find that the question of admissibility of credit of duty in respect of Oxygen and dissolved Acetylene gas used as input in the manufacture of steel castings which arise as an exempted intermediate product in the course of the manufacture of the final product, namely Bogies and Couplers was examined by the Tribunal in the case of Collector of Central Excise v. Hindmtran Development Corporation, reported in 1990 (47) E.L.T. 376 . The Tribunal after observing that this question had been the subject matter of quite a few decisions, went on to discuss the following cases :-
(i) Titagarh Paper Mills-1985 (21) E.L.T. 901 (Tri.)
(ii) CCE v. Sirsilk Ltd.-1986 (25) E.L.T. 297 (Tri)
(iii) CCE, Bombay v. Hindustan Lever Ltd.-1984 ECR 2006 CEGAT
(iv) Nagrat Paints v. Union of India-1978 (2) E.L.T. J 39 (Allahabad)
(v) NGEF Ltd. v. CCE, Bangalore-1985 (22) E.L.T. 705 (Kar.) After analysing the decisions mentioned above the Tribunal came to the finding that Oxygen gas and dissolved Acetylene gas were entitled to be considered as inputs used in the manufacture of not only steel castings, which emerge as intermediate products but also for the ultimate product namely bogies and couplers. The relevant extract from the Tribunals decision is reproduced below :-
"Applying the above-mentioned series of decisions, it appears that the present case of utilisation of Oxygen and Dissolved Acetylene Gas for cutting of runners/risers etc. etc. of the steel castings needs to be re-examined to decide whether they may be taken to be used in or in relation to the final products namely Bogies and Couplers. It is common ground that the steel castings are manufactured by the respondents which they use for the manufacture of the final products, bogies and couplers. The cuttings of runners, risers etc. arc essential for the manufacture of the steel castings. In other words, the steel castings cannot be manufactured without cutting the runners and risers. The respondents have set out to manufacture bogies and couplers and not steel castings. Steel castings are not the finished excisable goods they wanted to make. Their finished goods are bogies and couplers. Accordingly, the two gases in question would definitely be eligible to be considered as used in the manufacture of steel castings. The only inputs which are not eligible for the credit facility under Rule 57A are those described in the Explanation Clause thereunder. Such inputs are machines, machinery, plant equipment, apparatus, tools or appliances etc. used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the tinal products. Though these gases are, no doubt, used for producing or processing of the steel castings, they are not in the nature of machine, machinery, appliance etc. specially mentioned. When any group of goods or items etc. are sought to be excluded in any legal provision, the exclusion will be limited to only those that are specifically mentioned. It is not the same as an inclusion clause where the scope of the concerned provision will not be limited to only the entries specifically listed. These will be illustrative and not exhaustive. Such is not the situation where certain entries are sought to be excluded from a legal provision. Hence we have no hesitation in holding that Oxygen Gas and Dissolved Acetylene Gas being not machines, machinery etc. are actually entitled to be considered as inputs used in the manufacture of not only steel castings, the immediate target for their use but also for the ultimate product namely bogies and couplers. In that view of the matter, we feel that the Trade Notice and its source, the Circular issued by the Central Board of Excise and Customs need a second look by the authorities concerned."
7. On the ratio of the Tribunal's decision quoted above and having regard to the fact that Cement Spun Pipes produced by the appellants cannot be manufactured without wire, we hold that wire produced by the appellants out of re-rollable material received by them as input would constitute an intermediate product in the manufacture of Cement Spun Pipes. For these reasons we hold that Modvat credit would be admissible on re-rollable materials used by them as inputs for the production of wire which is used as intermediate product in the manufacture of Cement Spun Pipes.
8. In the result, we allow the appeals with consequential relief to the appellants.