Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Flex Lamination on 8 May, 1998
Equivalent citations: 1998(102)ELT574(TRI-DEL)
ORDER G.R. Sharma, Member (T)
1. The short point for determination in these appeals is whether the Gravure Printing Cylinders captively used by the assessee for printing laminated plastic film are intermediate products in the process of manufacture of printed laminated plastic film, though exempt under Notification No. 67/91 and whether the inputs that go into the manufacture of GP Cylinders shall be admissible to Modvat credit or not.
2. Shri S. Srivastava, ld. JDR submits that GP Cylinders are captively used in the manufacture of printed laminated plastic film. He submits that Notification No. 67/91 exempts such cylinders as are used captively. He, therefore, submits that once these cylinders for sale are exempt, they will be covered by the provision of Rule 57C meaning thereby that no Modvat credit will be admissible to the inputs used in the manufacture of these cylinders. He refers to the decisions of this Tribunal in the case of Shivaji Works Ltd. v. C.C.E. - 1990 (50) E.L.T. 50 and Mysore Kirloskar Ltd. v. C.C.E. -1990 (50) E.L.T. 175 and submits that this Tribunal held that the sand moulds are not intermediate products hence credit on inputs used in preparation of sand moulds were disallowed in these appeals. He further submits that the role of GPC in manufacturing of printed polyester films is more akin to that of sand moulds used in manufacturing of castings and on the same analogy GPCs cannot be treated as intermediate products and as such inputs used in manufacturing of GPC would not be eligible for Modvat credit. Ld. DR submits that the term intermediate product has been defined in the concise Oxford Dictionary and relies on the same. He also tried to distinguish the judgment of this Tribunal in the case of Northern India Leather Cloth Mfg. Co. v. C.C.E., Delhi -1994 (70) E.L.T. 380 (Tribunal). Ld. DR, therefore, submitted that the provisions of Rule 57C are squarely applicable to GP Cylinders and therefore, the ld. Commissioner (Appeals) has wrongly held that Modvat credit of duty paid on inputs used in the manufacture of GP Cylinders was applicable to these cylinders and prayed that the appeals may be allowed.
3. Shri S. Madhavan, ld. Chartered Accountant appearing for the respondents submits that the decision of this Tribunal in the case of Shivaji Works Ltd. and Mysore Kirloskar Ltd. is no longer good law. In view of the findings of the Larger Bench of this Tribunal in the case of Rama Krishna Ind. reported in 1996 (82) E.L.T. 575 in which the Tribunal held that sand moulds are intermediate goods though in that particular case it was noticed that sand moulds are not marketed as such. He referred to Paras 14 and 16 of this judgment to support his contentions. He also referred to the judgment of the Hon'ble Madras High Court in the case of Ponds India v. C.C.E. reported in 1993 (63) E.L.T. 3. In Para 23 it held that the case law laid down in Shivaji Works Ltd. and Mysore Kirloskar Ltd. was no longer good law. On the question of whether the cylinders are a part of machinery, the Chartered Accountant referred to the Larger Bench decision of this Tribunal in the case of Union Carbide India Ltd. v. Collector of Central Excise, Calcutta-I reported in 1996 (86) E.L.T. 613 holding that if the cylinders are parts, they are not included in the exclusion clause of Rule 57A of the Central Excise Rules. Ld. Chartered Accountant also referred to this Tribunal's decision in the case of Collector of Central Excise, Bombay-Ill v. Indian Aluminium Co. Ltd. reported in 1994 (69) E.L.T. 776 wherein the Tribunal examined at length the implications of Rule 57C and Rule 57D and also that a final product in respect of a particular industry may be an intermediate product for another industry. He submits that from whichever angle the issue is examined, the net result will be that the duty paid on inputs used in the manufacture of GP Cylinders will be admissible to Modvat credit. He, therefore, prays that the impugned order may be upheld and the appeal may be rejected.
4. We have heard the submissions made by both the sides. In the instant case the admitted position is that the GP Cylinders are manufactured by the appellants and are in a major part consumed captively. Captively consumed GP Cylinders are exempt under Notification No. 67/91, therefore, a question arose whether the duty paid on the inputs used in the manufacture of the GP Cylinders can be admissible to Modvat credit or not. The department alleged that it was not admissible whereas the respondents contended that it was admissible. We have heard the rival submissions. We note that in the instant case the appellants themselves have contended that GP Cylinders are used in the process of manufacturing of printed plastic laminates in the same way as sand moulds are used in the manufacture of steel castings. We also note that the question of sand moulds being used in the manufacture of steel castings came up for consideration before the Larger Bench of this Tribunal in the case of Rama Krishna Industry. The Tribunal after examining the various rules particularly Rule 57C and Rule 57D(2) held that sand moulds no doubt for sale are exempt but in the process of steel castings, they are intermediate products and therefore, are not-governed by Rule 57C alone but are to be considered in the light of the provisions of Rule 57D(2) and held that resins and other chemical used in the manufacture of sand moulds will be eligible to Modvat credit. We, therefore, agree with the contention of the ld. Chartered Accountant that the law set out in the case of Shivaji Works Ltd. and Mysore Kirloskar Ltd. is no longer good law.
5. We have also considered the plea about intermediate product as contended by both sides. We agree with the submissions of the ld. Chartered Accountant that the same product may be a final product in respect of a particular goods but the same may be an intermediate product in respect of other goods. Thus, we have to examine whether in the instant case the GP Cylinders are final product or intermediate product. No doubt they are final product if they are cleared on payment of duty but if they are captively used in the factory itself for printing laminated plastic film, they become intermediate product. Intermediate product if they come into existence and even if for the time being, they are exempted from payment of duty, Modvat credit taken on the inputs used in the manufacture of the GP Cylinders will be admissible in terms of Rule 57D(2). Having regard to the above discussions, we uphold the impugned order and reject these appeals.