Customs, Excise and Gold Tribunal - Delhi
C.C. Ex. vs Rajaram Corn Products (Punjab) Pvt. ... on 25 April, 1994
Equivalent citations: 1995(75)ELT346(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. These are six appeals filed by the Department involving common issues and, therefore, they are clubbed together and are being disposed of by this common order.
2. The point to be considered in these cases is regarding eligibility of certain inputs for set off of duty under Notification No. 201 /79, dated 4-6-1979. In all these cases the respondents were engaged in the manufacture of Liquid Glucose falling under Item 1E of the Central Excise Tariff. In Appeal Nos. E/257, 357, 359 and 364/86-D, they used activated carbon in the manufacture of Liquid Glucose and availed set-off of duty in terms of Notification No. 201/79 dated 4-6-1979 as amended. Similarly, they used 'Indian Hip Resins' in Appeal No. E/358/86-D and 'Dicamol and resins' in Appeal No. E/362/86-D and availed credit accordingly. According to the Department, after the amendment of the Notification No. 201/79 by Notification No. 105/82, dated 28-2-1982 the input duty relief was restricted to raw material or component parts and it was not admissible in respect of the above items used in the manufacture of Liquid Glucose. Accordingly, the Assistant Collector confirmed demand in all these case. On appeal filed by the parties, the concerned Collector (Appeals) decided the issue in favour of the parties holding that input duty relief in respect of the above items was admissible even after the amendment of Notification No. 201/79 by Notification No. 105/82 by placing reliance on Tribunal's Order No. C-314/85, dated 24-2-1985 in the case of Collector of Central Excise, Bhubaneswar v. Titagarh Paper Mills, reported in 1985 (21) E.L.T. 901 (Tri.).
3. Respondents M/s. Rajaram Corn Products (Punjab) Pvt. Ltd. were represented by Shri R.K. Jain, learned Consultant and respondents M/s. Sukhjit Starch & Chemicals Ltd., were represented by Shri K.K. Kapoor, learned Consultant and Department was duly represented by Smt. J.M. Shanti Sundaram, learned SDR in all these cases.
4. Smt. Shanti Sundaram submitted that although this issue has been considered by the Tribunal in favour of the assessee in respect of the activated carbon as per Order Nos. E/58/94 & 59/94-D, dated 3-2-1994 following the ratio of the decision in the case of Collector of Central Excise v. Ballarpur Industries Limited, reported in 1989 (43) E.L.T. 804 still she submits that issue requires reconsideration in view of the fact that items in question and facts involving in these cases are not at par with the decision of the Supreme Court and, accordingly, previous decision of this Tribunal is distinguishable. The product might comprise of different types as it was explained by the Supreme Court in the above case in para 5 of the said order that the ingredients used in the chemical technology of manufacture of any end-product might comprise, amongst others, of those which may retain their dominant individual identity and character throughout the process and also in the end-product; those which, as a result of interaction with other chemicals or ingredients, might themselves undergo chemical or qualitative changes and in such altered form find themselves in the end-product; those which, like catalytic agents, while influencing and accelerating the chemical reactions, however, may themselves remain uninfluenced and unaltered and remain independent of and outside the end-products and those, as here, which might be burnt up or consumed in the chemical reactions. Among all these items, the Supreme Court dealt with the issue with reference to the last-mentioned class and, accordingly, it was held that such items are eligible to be called as raw materials for end-product for qualifying themselves in terms of Notification No. 201/79. The items involved in these cases are neither burnt up nor consumed in the chemical reactions. Furthermore the activated carbon has been used and reused for several times and it cannot be said that activated carbon is a raw material for the endproduct. It is used as a filtering medium mostly in the nature of an apparatus and, accordingly, the benefit of notification cannot be extended to. Notification exempts the item which has been used as raw material or component part and since the items are neither of them the Department was justified in denying the benefit in terms of the above notification. She relied upon the decision of the Tribunal in the case of Collector of Central Excise, Chandigarh and Anr. v. Kashmir Vanaspati and Anr. reported in 1987 (31) E.L.T. 218 (Tribunal) and Amrit Vanaspati Company v. Collector of Central Excise, Meerut, reported in 1988 (35) E.L.T. 479, in support of her contention. She said that demand was in time and on the issue of limitation she would adopt the reasoning given in the order passed by the respective Assistant Collectors.
5. Arguing for the respondents Shri R.K. Jain submitted that this issue is squarely covered by the order of the Tribunal as per Order Nos. 58 & 59/94-D referred to above and precedent decision is binding on the Tribunal. Department has filed appeals on the ground that decision of the Tribunal in the case of Titaghur Paper Mills has not assumed finality since the Department has filed an appeal before the Supreme Court but now the issue is no longer res integra in view of the finality of this issue by the Apex Court in the case of Ballarpur Industries. It is not the case of the Department that item in question was an apparatus as can be seen from the grounds of appeals and Departmental Representative may not be permitted to take new ground at this stage. The decisions referred to by the Departmental Representative are no longer good law in view of the decision of the Supreme Court on the very issue particularly in respect of Paper Industries in the case of Ballarpur Industries Limited and similar view was expressed by the Supreme Court with reference to the issue of set-off of duty under very Notification No. 201/79 in the case of Collector of Central Excise v. Jay Engineering Works Ltd., reported in 1989 (39) E.L.T. 169 (S.C.). He said that prior to the amendment of the Notification it was held that activated carbon was entitled to set-off of duty under Notification No. 201/79 in the case of Akola Oil Industries Ltd. v. Collector of Central Excise, reported in 1990 (46) E.L.T. 489 (Tribunal) and exemption cannot be denied even after amendment since it is neither excluded nor changed its character, and also cited a series of decisions in support of his contention. He said that item is used in the manufacture of end-product and it is consumed therein since quantity of the item has been used and deteriorated.
6. While adopting the arguments of Shri R.K. Jain, Shri Kapoor submitted that in view of the advanced technology the items are used in the manufacture of end-product for the improvement of quality of the product and since the items are essentially used in bringing better quality of end-product, exemption in terms of Notification cannot be denied. The issue with reference to the set off of duty was first considered by the Supreme Court in the case of J.K. Cotton Spinning and Weaving Mills and same was followed in the case of Eastend Paper Industries Ltd., reported in 1989 (43) E.L.T. 201 (S.C.) and those two decisions were referred to in Ballarpur Industries Ltd., (supra) while arriving on the finality of this issue. He said that irrespective of the chemical reactions definitely there would be a physical change and furthermore it cannot be said that it was not consumed since it gets consumed gradually and ultimately the item has to be replaced.
7. In reply, Smt. Shanti Sundaram stated that deficiency in the quantity is not supported by a technical literature and this aspect was considered by the respective Adjudicating Authorities in their orders.
8. We have considered the matter. According to Department that the substitution of the word 'inputs' by the word 'raw material' or 'component parts' by amending Notification No. 105/82-C.E., dated 28-2-1982 was intended to restrict the benefit of duty relief only in respect of raw material or component parts, unlike the concession which was available to all inputs before the said amendment to Notification No. 201/79-C.E., dated 4-6-1979. It was argued that although the above items are used in the manufacture of liquid Glucose but they are certainly not the raw materials for the manufacture of liquid glucose. When the similar issue had come up for consideration before the Tribunal in the case of Titaghur Paper Mills, reported in 1985 (21) E.L.T. 901 and in the case of Ballarpur Industries Ltd. v. Collector of Central Excise, reported in 1989 (39) E.L.T. 710, it observed that the term 'raw material' has to be interpreted in the circumstances of each case in the absence of any acceptable or useful definition of the term either in the Dictionary or in the technical literature and accordingly held that Sodium Sulphate lye, sodium sulphate, daicol and fluo solid lime used for bleaching of pulp should be considered as raw materials in the manufacture of paper; they serve a distinct and definite purpose in the process of manufacture and since they were essential raw materials, Department was not justified in denying the benefit in terms of Notification even after amendment. Ballarpur decision was challenged in appeal before the Supreme Court and the decision of the Tribunal was upheld by the Supreme Court as referred to above 1989 (43) E.L.T. 804. While upholding the view it was clearly held that items used in the end-product might undergo chemical or qualitative changes or while accelerating the chemical reactions, however may themselves remain uninfluenced and unaltered and remain independent of outside the end-product, still they are 'Raw material' for the end-product and are eligible for benefit in terms of Notification. The relevant test is not its presence in the end-product, but the dependence of the end-product for its essential presence at the delivery end of the process. Supreme Court was also of the view in the case of Collector of Central Excise v. Jay Engineering Works -1989 (39) E.L.T. 169 that the name plate fixed on the electric fans has to be considered as input eligible for set off under Notification No. 201/79. It is clear from the decisions of the Apex Court that it is not necessary for the material to be present in the final product but it is sufficient if it has been used in the end-product to avail the benefit of set-off of duty under Notification No. 201/79. Since then Tribunal has been consistently taking the view of this issue in favour of the Assessee holding that issue is no longer res integra since the issue is covered by the decisions of the Supreme Court. We are not inclined to take different view on this issue. Following the precedent, we uphold the impugned orders and, accordingly, the appeals filed by the Department are hereby dismissed.