Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs General Cement Pvt. Ltd. on 6 September, 1988
Equivalent citations: 1989(39)ELT76(TRI-DEL)
ORDER I.J. Rao, Member (T)
1. The respondents claimed exemption from duty on the PCC Poles manufactured by them and falling under Tariff ltem.68 on the ground that these goods were covered by Notification No. 105/80 as amended by Notification No. 48/81 -CE. According to the Notification as amended one of the conditions was that the sum total of the value of the capital investment made from time to time on the plant and machinery installed in the industrial unit in which the goods are manufactured is not more than Rs. 20 lakhs. The respondents declared the value of the plant and machinery, pumps and motors, steel pipes and fittings at 19,67,866.61. The Assistant Collector added the cost of a crusher estimating its value at Rs. 50,000/- whereby the respondents became ineligible to the concession, the value of the plant & machinery having been held to exceed Rs. 20 lakhs. Aggrieved, they filed an appeal to the Collector (Appeals) who in the impugned order allowed the said appeal taking into consideration a Board's circular according to which the cost of the generator set is to be excluded for the purpose of computing the cost of plant & machinery as it is not that all units installed generating sets and such sets are installed only in certain circumstances. The Collector also ordered the exclusion of the cost of moulds on the ground that moulds or moulds whether they are made of iron and steel or of any other material. The present appeal is against this order, having been filed by the Revenue.
2. Shri Nigam, the learned SDR has submitted that the Board's circular No. (I) Iron & Cables/75 dated 8.9.75 which the Collector (Appeals) applied to this case clarified the position in regard to inclusion of equipment such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores in respect of small scale industry of wire and cables. According to the learned SDR in the present matter the moulds are not equipments like the other items but are the main equipment for manufacture of excisable goods and therefore there cannot be any comparison between the moulds used in the wires and cables industry and the respondents industry manufacturing cement poles where the moulds are not consumable goods. He submitted that the Board's circular does not have any statutory power and merely gives clarification and guidance to lower authorities. Shri Nigam referring to the value of the generator set submitted that the Assistant Collector's finding in regard to the same are correct. (The Assistant Collector held that generator set is capital goods and therefore plant and machinery used for generating electricity and that therefore its value was includible in that of plant & machinery). He reiterated the findings of the Assistant Collector with regards to the inclusion of the value of pump, motors, steel pipes, fittings and steel cutter. He further submitted that the Board's circular relates to Notification No. 199/75-CE only and the provisions of Notification 105/80CE are entirely different. Even if held otherwise the Board's circular is not definitive according to the learned SDR. Finally he pleaded that the term 'plant & machinery' includes any or all machinery intended for industrial capacity and in support of his argument cited judgment of the Tribunal in Dempo Engineering Works (P) Ltd. v. Collector of Central Excise & Customs, Bombay [1984 (16) E.LT. 358 (Tribunal)].
3. Shri J.S. Agarwal, the learned Consultant for the respondents referred to paragraph 4 of the impugned order and submitted that the guidelines are based on the advice of Ministry of Industry. Supporting the impugned order Shri Agarwal cited the following case law (i) Collector of Central Excise, Madurai v. Maharaja Paper Board (P) Ltd. Maharajapuram [1986 (23) E.LT. 484 (Tribunal)]; (ii) Mis. Ahmedabad Chemicals Pvt. Ltd. v. Collector of Central Excise, Baroda [1984 (16) E.LT. 560 (Tribunal)
4. Shri Agarwal further submitted that the generating set and moulds any way were not includible as moulds are consumables. The inputs used by the respondents may not be destroyed as quickly as in the other industries but these too are ultimately destroyed and have to be replaced. He further submitted that the stone crusher did not belong to the appellants and referred to the Assistant Collector's order to support his claim that the ownership of the stone crusher did not vest in the appellants. The learned SDR however denied that there were such a finding in the Assistant Collector's order.
5. We have considered the arguments of both sides. The question before us is whether the Collector (Appeals) was correct in following the Board's circular following which he allowed the appeal. We have observed earlier that the Notification 105/80 in its proviso has a condition that the value of the capital investment made from time to time on plant and machinery installed In the Industrial unit, should not exceed 20 lakhs. There is no definition of plant & machinery in the Notification. Therefore there was need for the Central Board of Excise & Customs to clarify what was intended by the expression. Earlier, in similar circumstances, the Board seemed to have consulted the Ministry of Industry before issuing the circular. It is true that the circular was not issued with reference to the present Notification but the circular itself is in general terms and does not mention any particular Notification. Therefore, in our opinion the Collector (Appeals) was correct in applying the Board's circular to the facts of the present case.
6. We note that the Collector (Appeals) took into consideration all relevant factors when passing the orders as the following abstract of his order shows :
"I do not agree with the findings made in the impugned order. It has been clearly mentioned in the Board's circular referred to above that generating set is to be excluded for the purpose of computing the cost of plant and machinery. In view of this clear instruction there is no reason as to why it should be included in the cost of plant and machinery referred to in the Notification 105/80. There is a good reason behind not including the cost of generating set in the cost of plant and machinery. It is not that all units instal generating sets. Generating set is normally employed only due to uncertainty in receipt of electricity from the Electric Supply Undertakings or authorities. If the supply of electricity is regular there is normally no necessary for installing a generating set. It is for this reason perhaps that generating sets are required to be excluded from the cost of plant and machinery as stated the Board's circular which apparently based on a circular of the Department of Small Scale Industry in the Ministry of Industry. Similarly with regard to the mouids I do not see any force in the arguments of the adjudicating authority. Moulds are moulds whether they are made of iron and steel or of any other material. It may be major Item of expenditure so far as this industry is concerned but the condition of investment of Rs. 20 lakhs on plant & machinery is applicable to all industries In general. Therefore in my view the value of moulds is also required to be excluded in view of the circular referred to above. Accordingly, the total investment on plant and machinery by the appellant would be far below Rs. 20 lakhs. The benefit of Notification No. 105/80, therefore, cannot be denied to the appellant. I order accordingly and allow the appeal."
7. In the light of what we have said earlier we do not find any error or impropriety in the impugned order and find no reason to interfere with it. We, therefore dismiss the appeal.