Customs, Excise and Gold Tribunal - Mumbai
Crompton Greaves Ltd. vs Commissioner Of Central Excise on 23 August, 2002
Equivalent citations: 2003(161)ELT537(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. Crompton Greaves, the appellant before us is engaged in the manufacture of electric motor and power driven pumps. It utilises in the manufacture of power driven pumps some part of the electric motor that it makes, the rest of the electric motors are sold as such. The appellant imports wire rods of copper and after furnishing intimation required, sent the rods to job worker in terms of Rule 57F(4). The job worker drew the rods into winding wire and returned the winding wire to the appellant. These winding wires were sent by it to another job worker under Rule 57F(4) for use in the manufacture of wound status. Wound status on it received from the factory are utilised in the manufacture of electric motor which we have noted, which are either cleared on payment of duty or utilised in the factory in the manufacture of pumps. Part of these pumps are cleared on payment of duty; some variety primarily intended to handling water which are specified in heading 84.13 appearing at the nil rate of duty applicable to that rate.
2. The appellant was issued eight notices, commencing from January 1998 going on till February 2000. The notices, which are identically worded, demanded duty upon the copper wire that emerges in the manufacture of pumps. The second paragraph of the notice, which contains the allegations is reproduced below:
"The assessee avails Modvat on copper under Rule 57A of Central Excise Rules, 1944. The input copper is then manufacture of P.D. Pumps. Thus the assessee captively consumes Copper Wire classifiable under Chapter 85.44 of Central Excise Tariff Act, 1985. Sr. No. 84.1 of the Notfn. No. 8/96 84 & 85 of Central Excise Tariff Act, 1985 captively consumed within the factory of production in the manufacture of P.D. Pumps primarily designed for handling water. However, the said notification makes an exception for winding wires captively consumed within the factory of production for the manufacture of P.D. Pumps primarily designed for handling water viz. Centrifugal pumps, Deep tube well pumps, Turbine Pumps, Submersible Pumps, Axial Flor and Mixed Flow Vertical Pumps, Thus, the copper wire consumed within the factory of production for the manufacture of P.D. Pumps designed primarily for handling water is chargeable to duty @ 25% adv. under Chapter 85.44 of Central Excise Tariff Act, 1985. The assessee has consumed 319467 kgs. of copper during the period January, 1996 to February, 1997."
3. In the order impugned in this appeal, the Commissioner has confirmed the proposal in seven of the eight notices, holding the eighth to be barred by limitation. These appeals are against the common order confirming the proposal.
4. The contention that was taken before the Commissioner and is taken before us is that the notice is misconceived. The appellant never claimed the benefit of notification 8/96, and did not apply the exemption contained in it to any of its products. The relevant entry in notification, refers to 84.1 exempts goods falling inter alia under Chapter 85 of the tariff "other than the following namely, (a) Electric Steam and Lamination; (b) Bearing; and (c) Winding wire. The notification therefore does not grant exemption to Winding wires. No duty was paid by the job worker on the winding wires not because of exemption but by application of Rule 57F(4)(1).
5. The Commissioner has attempted to answer this point by saying that the fact that no duty is paid on electric motors which the appellant captively consumed showed that it had availed of the benefit of notification 8/96. He concludes therefore that the appellant had enjoyed the benefit of exemption which it was entitled to whether or not it had applied for claimed the exemption.
6. It is not denied by the counsel for the appellant that no duty was paid on electric motors that were used in the manufacture of power driven pumps. It appears to us that, where the electric motors were used in the manufacture of power driven pumps which were liable to nil rate of duty the exemption available under 217/86 to goods captively consumed will not apply. There therefore has been a failure to pay duty on pumps in the manufacture of such goods. It however does not follow from this fact that the failure to pay duty was on account of its exemption in Notification 8/96. The department perhaps would have been within its right to demand duty on these electric motors but this fact cannot be ceased upon to apply the Notification 8/96 to a situation in which it is not applicable at all. The fact remains that the exemption available in the relevant entry of 8/96 will not apply to winding wire. As we have noted, the exemption is applicable to all goods inter alia falling under chapter 85 other than winding wire. It was therefore not possible for the appellant or indeed any one else to legally avail of the exemption in case of winding wires.
7. Apart from this, the manufacture of winding wire was carried out not by the appellant but by the job worker. If for any reason, duty was payable on winding wires, it is the job worker who has to pay the duty and not the appellant. The answer that the departmental representative furnishes is that since the finished goods are exempted from duty, the benefit of the Modvat rules will not be applicable in respect of inputs used in the manufacture of these finished goods, and therefore the provision of Rule 57F(4) will not apply. We accept the correctness of this contention in principle. It does not follow from this however that the duty liability falls on the appellant before us. If the provisions of Rule 57F(4) were not available, the job worker is not entitled to sent inputs that he processes to the supplier of these inputs without payment of duty; he would have to pay duty on these unless of course, some other exemption were available. The liability to duty that would fall upon the job worker therefore could not have been transferred to the appellant. There was therefore no basis for demanding duty and imposing penalty.
8. The appeal is accordingly allowed and the impugned order set aside.