Custom, Excise & Service Tax Tribunal
Saint Gobain Sekurit India Ltd vs Commissioner Of Central Excise on 3 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No.II APPEAL No.E/3164/05 (Arising out of Order-in-Appeal No.PIII/180/2005 dated 08/06/2005 passed by Commissioner of Central Excise (Appeals), Pune) For approval and signature: Honble Mr.S.S.Garg, Member (Judicial) Honble Mr. Raju, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Saint Gobain Sekurit India Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Pune Appearance:
Shri.Sachim Chitnis, Advocate for appellant Shri.NN Prabhudesai, Supdt. (AR), for respondent CORAM:
Honble Mr. S.S.Garg, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing : 03/02/2016 Date of Decision : /2016 ORDER NO Per: Raju
1. The appellants are engaged in manufacture of laminated safety glasses falling under heading 7004.20. Pallets and trolleys are used in the various stages of manufacture of final products basically as material handling equipment for movement of semi-finished and finished products from one place to another in the factory efficiently and to avoid breakage. The appellants get the pallets and trolleys fabricated on labour charge basis from M/s.Yash Engineers in their factory by supplying the raw materials. A show-cause notice was issued to the appellant seeking to recover duty on these pallets and trolleys seeking to classify under heading 7308.90 of CETA and seeking to denied the benefit of notification No.67/95-CE dated 16/03/95. Notification No.07/95-CE interalia exempted capital goods as defined in Rule 57Q of the Central Excise Rules, 1944 manufactured in the factory and used within the factory of production. The original adjudicating authority has held that the goods are not classifiable under heading 84.27 or 84.28 as claimed by the appellant, but they are classifiable under heading 73.08/73.26 of CETA. Relying on the decision of Maruti Udyog Ltd., Vs. CCE 1998 (01) ELT 675, the Commissioner (Appeals) observed that the goods cannot be treated as capital goods. Aggrieved by the said order, the appellants are in appeal before this Tribunal.
2. The learned Counsel for the appellant argued that the Larger Bench of this Tribunal in the case of Banco Products (India) Ltd. Vs. CCE, Vododara 2009 (235) ELT 636 (Tri-LB) has held that the plastic crates used as material handling device within factory of production are capital goods and are entitled for the benefit of Notification No.217/86-CE. He particularly relied on para 23 which reads as under:
23. By various decisions of the Tribunal, in number of cases, it has held that the equipment used for collecting, transporting or dispensing material being necessary for undertaking production, are required to be held as used in relation to the manufacture of the final product. Reference in this regard, is made to Tribunals decision in the case of CCE Bangalore v. M/s. Anglo French Drugs & Indus. Ltd. - 2008 (225) E.L.T. 76 (Tri.-Bang.), in the case of CCE Rajkot v. M/s. Ajanta Transistor Clock Mfg. Co. - 2009 (233) E.L.T. 97 (Tri.-Ahmd.). In the later decision, Tribunal took note of the Honble Supreme Courts decision in the case of M/s. Tata Engineering and Locomotive Co. Ltd. [2003 (158) E.L.T. 130 (S.C.)] holding that the bins, trolleys, etc. are entitled for the benefit of Notification No. 217/86-C.E., which exempts the goods used within the factory of production and observed that as the provisions of notification are similar to Rule 57A, the benefit has to be extended to the plastic crates, as input. The plastic crates were also held to be input in the case of M/s. GKN Sinter Metals Ltd. v. CCE Pune-I - 2008 (224) E.L.T. 560 (Tri.-Mumbai).
He argued that the decision of Maruti Udyog Ltd. (supra) has been given in respect of definition of capital goods as is existed in the year 1995-96 and is not applicable to the definition of capital goods as it existed in the year 1999-2000. He further argued that the table annexed to Rule 57Q of the CER, 1944 covers all components/spares and accessories of the goods specified against Sl.No.1 to 4 of the said table. It was argued by the learned Counsel that even if the said goods are held classifiable under Chapter 73 of the CETA, the same being the accessories of the material under the equipment falling under heading 84.27 & 84.28 will be covered by the definition of capital goods.
3. The learned AR relies on the impugned order. He relies on the decision of the Honble Supreme Court in the case of Gajra Gears Ltd., Vs. CCE 2015 (320) ELT 38 (SC). He argued that exactly the same issue regarding leviability of duty exemption on the pallets manufactured and used within the factory and was examined in the said decision.
4. We find that the exactly the same issue which is disputed in this appeal was before the Honble Supreme Court in the case of Gajra Gears Ltd. (supra). The Honble Supreme Court in the case of Gajra Gears Ltd. was examining the classification of pallets manufactured and used within the factory for movement of material during the process of manufacture. The Honble Supreme Court in the said decision has observed as follows:
2.?The process of manufacturing of motor vehicles parts involves various operations. The appellant, for this purpose, also makes use of material handling equipments like hand trolley or fork lift etc. These trolleys and fork lift are placed on iron/steel or aluminum known as 3 FAG Pallets. These pallets are manufactured by the appellant in its own factory and captively used for the aforesaid purpose.
3.?Two issues have arisen in respect of these pallets. First relates to its classification and second issue is as to whether the appellant, in respect of the aforesaid pallets, can claim benefit of Notification No. 67/95-C.E. dated 16-3-1995, as amended and prevalent on the date when the dispute arose, namely, in the year 1999.
4.?The appellant had filed its declaration claiming classification under Chapter Heading 84.31 and had also claimed benefit of the aforesaid Notification. This was denied by the adjudicating authority and the view of the adjudicating authority has been affirmed by the CESTAT in its impugned judgment dated 1-12-2004. As per the Department the goods in question are to be classified under Chapter Heading 7326.90.
5.?We have gone through the orders of the Commissioner as well as CESTAT and we find that the classification as done by the Department of the aforesaid goods is correct. Without burdening this order with our reasons we would like to refer to the following discussion contained in the impugned decision with which we are in agreement :
73.26 - Other articles of iron or steel 84.31 - Parts suitable for use solely or principally with the machinery of Heading Nos. 8425 to 84.30. It is not in dispute that the impugned pallets are made of iron or steel. It is the contention of the respondents that these pallets are in the nature of material handling equipment and are specifically designed to put up in process goods for shifting or transfer and as the pallets are suitable for use solely or principally with the machinery of Heading No. 84.27 (fork-lift trucks) these are to be classified under Heading 84.31. For being classified under Heading 84.31, the goods should be first a part and secondly suitable for use solely or principally with the machinery of Heading Nos. 84.5 to 84.30. The impugned pallets are not parts of fork-lift trucks as they are complete without these pallets. It has been held by the Tribunal in the case of Sandvik Asia Ltd. v. C.C.E., Pune, 1997 (93) E.L.T. 475 (T) that a part is one without which the particular machinery was not operational or could not suitably discharge the function for which it has been designed. The Tribunal in the said decision has found that inserts were not parts of the excavator as the excavator was operational even without these inserts and they were meant only to improve the life of the teeth provided with the scoopers. In the present matter also the fork-lift truck is operational without pallets and as such pallets are not parts of the same. If the contention of the Respondent is accepted, motor sprit will be part of a motor car as the same cannot be used without it. Once it is held that pallets are not parts of fork-lift truck, Note 2 to Section XVI is not attracted as it only provides guidance for the classification of parts and not all goods which are used or to be used with the machineries falling in Section XVI of the Tariff. The learned SDR has rightly distinguished the decision in the case of Anup Malleable Ltd. which was dealing with the classification of Pallet frame assembly which moves on rails. We, therefore, hold that the impugned pallets, being not part of fork-lift trucks, are not classifiable under Heading 84.31 of the Tariff.
6.?Insofar as the second question is concerned, namely, whether benefit of exemption under Notification No. 67/95 issued under the Central Excise Act, 1944 is available in respect of these pallets or not, we find that the Tribunal has held that the Notification exempts capital goods, as defined in Rule 57Q of the Central Excise Rules, 1944, manufactured in a factory of production and at the material time as per the definition of capital goods given in Rule 57Q, goods falling under the Chapter were not covered within the said definition.
7.?We have been taken through the aforesaid Notification dated 67/95, as amended in the year 1996 which was in vogue in the year 1999 as well. The language of the said Notification makes it clear that it exempts the following kind of goods :
(i)?Capital goods as defined in rule 57Q of the Central Excise Rules, 1944 manufactured in a factory and used within the factory of production;
(ii)?goods specified in column (2) of the Table hereto annexed (hereinafter referred to as inputs) manufactured in a factory and used within the factory of production in or in relation to the manufacture of that products specified in column (3) of the said Table; from the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central excise Tariff Act, 1985 (5 of 1986):
Provided that nothing contained in this notification, shall apply to inputs used in or in relation to the manufacture of final products (other than those cleared to a unit in a Free Trade Zone or to a hundred per cent export-Oriented Undertaking or to a unit in an Electronic Hardware Technology Park or to a unit in Software Technology Parks or supplied to the United Nations or an International Organisation for their official use or supplied to projects funded by the United Nations or an International Organisation, on which exemption of duty is available under the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995, which are exempt from the whole of duty of excise leviable thereon or are chargeable to Nil rate of duty.
Explanation. - For the purposes of this notification `inputs does not include -
(1)?packaging materials in respect of which any exemption to the extent of the duty of excise payable on the value of the packaging materials is being availed of for packaging any final products;
(ii)?packaging materials or containers, the cost of which is not included in the assessable value of the final products under section 4 of the [Central excise Act, 1944] (1 of 1944).
S.No. Description of inputs Description of final products
1. ??????(2) ???????(3)
1. All goods falling within the Schedule to the Central Excise Tariff Act, 1985(5 of 1986), other than the following, namely,- All goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely, -
(i) goods classifiable under any heading of Chapter 24 of the Schedule to the said Act;
(i) goods classifiable under any heading of Chapter 24 of the Schedule to the said Act;
(ii) goods classifiable under Heading Nos. 36.05 or 37.06 of the Schedule to the said Act;
(ii) goods classifiable under Heading No. 36.05 or 37.06 of the Schedule to the said Act;
(iii) goods classifiable under Sub-heading Nos 2710.11, 2710.12, 2710.13 or 2710.19 (except Natural gasoline liquid) of the Schedule to the said Act;
(iii) fabrics of cotton or man made fibres falling within Chapters 52, Chapter 54 or Chapter 55 of the Schedule to the said Act;
(iv) high speed diesel oil classifiable under Heading No. 27.10 of the Schedule to the said Act.
(iv) fabrics of cotton or man made fibres falling within Heading No. 58.01, 58.02, 58.06 (other than goods falling within Sub-heading No. 5806.20), 60.01 or 60.02 (other than goods falling within Sub-heading No. 6002.10) of the Schedule to the Act,.
8.? As per para (i) above, capital goods which are defined in Rule 57Q of the Rules, manufactured in a factory and used within the factory of production are exempted. We perused the definition of capital goods appearing in Rule 57Q which was in operation at the material time and find that the goods in question are not covered by the said definition. However, as per para (ii) those goods which are specified in Column (ii) of the Table which is appended to the said Notification and manufactured in a factory and used within the factory of production in or in relation to manufacture of final products specified in column (3) of the said table also stands exempted.
9.?Column 2 of the table gives the description of the inputs and column 3 of the table provides the description of the final products. Under the description of inputs, all goods falling within the Schedule to the Central Excise Tariff Act, 1985 are covered except certain goods which are categorically spelt out therein. The goods of the appellant herein, namely, pallets are not covered by the excepted categories and therefore would fall in the description of the said goods. When we look into the description of the final products, as given in column 3, we find that it again mentions the goods falling within the schedule to the Central Excise Tariff Act except certain specified items. Thus, the question that arises is as to whether the goods in question, namely, pallets manufactured in the factory are used within the factory of production in or in relation to the manufacture of the final products.
10.?It is an admitted position, as explained by the appellant itself, that these pallets which are manufactured/assembled in the factory of the appellant are in the nature of material handling equipment, to keep and carry work in progress goods from one machine to the other. Thus, the use of the pallets is for carrying out the material from one machine to the other. It cannot, therefore, be said that these goods are used in relation to the manufacture in or in relation to the manufacture of the final products. We are, therefore, of the opinion that column (2) of Notification shall also not be attracted.
11.?For our reasons, as mentioned above, we affirm the conclusion arrived at by the authorities below.
5. In view of the fact that the issue is squarely covered by the Honble Supreme Court decision in the case of Gajra Gears Ltd. (supra), the appeal is dismissed. (Pronounced in Court on ) (S.S.Garg) Member (Judicial) (Raju) Member (Technical) pj 1 2 Appeal No.E/3164/05