Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Lakhanpal National Ltd. on 4 November, 1986
Equivalent citations: 1987(12)ECR190(TRI.-DELHI)
ORDER
H.R. Syiem, Member
1. This is an appeal by the Collector of Central Excise, Vadodara against the order of the Collector of Central Excise (Appeals), New Delhi (at Bombay), No. T-92/BRD-45/85 dated 28th October, 1985. The Collector (Appeals) said that the Assistant Collector clubbed the two items calots and pellets of zinc together though they fall under two tariff sub-heads 26B(1) and 26B(2a), as if they were synonymous, a finding which is not based on any reasoning. He said that he could not endorse the classification of pellets as calots under tariff Item 26B(2a). He, therefore, set aside the order of the Assistant Collector, No. V/26B(3)-1/MP/77 dated 9.7.1981 [The Appellate Collector gives the Assistant Collector's order the date 9/10.1.1981, but the date on the order itself is 9.7.1981. The Collector's appeal also gives the date as 9/10.1.1981]. The result of the Collector's order is that the goods which the assessees call pellets would not be assessable to duty under 26B(2a).
2. The learned SDR began by pointing out that the dispute was in the period after a separate sub-item for calots had been introduced under Item 26B-Zinc, of the Central Excise Tariff. He then read the last paragraph of the Assistant Collector's order and said that the goods manufactured by the firm were calots manufactured from unwrought zinc, and that the calots are then used in the manufacture of dry cell battery cans; under Finance Bill, 1981 Sub-item (2a) was introduced for calots under Item 26B. The Assistant Collector held that duty was payable by the appellants, M/s. Lakkanpal National Ltd. on calots under tariff Item 26B(2a). Even if the goods were intermediate between unwrought zinc sheets/plates/ingots etc. and the finished battery cans, they are still dutiable in terms of Rules 9 and 49. The amendments of these two rules in 1982 would require levy of duty on intermediate goods that may arise during the manufacture of one article from another. The goods were not pellets but were calots, contrary to the claim of the appellants.
3. The learned Counsel for M/s. Lakhanpal read from the classification lists and said that he disputed that the goods were calots. The classification lists will show that they declare the goods as zinc pellets but they entered the word "calots" under protest. They clearly disputed the term "calots" in the classification list. They maintained that the goods were not calots but pellets and they are used in the manufacture of dry battery cans. The pellets are only intermediate goods and on that basis alone should not be liable to pay any duty. It was a continuous process in the production of finished battery cans from the unwrought zinc. He quoted 1985 Tax Law Report 2569 1985 ECR 1529 Supreme Court re : Ahmedabad Manufacturing & Calico Printing and read paragraph 6 that it was not possible to hold that the character of the goods at the intermediate stage of production could be taken into consideration for determining the liability under the Act. He also pointed out that in re: Union Carbide the Supreme Court ruled that if the goods could not ordinarily come to the market to be bought and sold, they cannot be assessed to duty. Their goods pellets are not sold but are used by them in the production of cans.
4. The two decisions quoted by the learned Counsel for M/s. Lakhanpal are not applicable to this case, because in the Union Carbide case, it was about aluminium torch bodies variously referred to as aluminium cans which the central excise wanted to charge to duty under Item 27 as extruded shapes and sections of aluminium. The dispute was on the cans and not on the aluminium slugs from which they were made. The other judgment on Calicut Special was regarding a cotton fabric. This was not a case of the fabric being assessed by central excise under a definite head. Our problem, on the other hand, is that the goods which the factory call pellets, are called calots by the central excise and they want to assess them under a specific head of calots of zinc, namely, 27B(2a).
5. The answer will, therefore, depend on whether the pellets are calots.
6. The process of manufacture of the goods is given by the manufacturers thus: the molten zinc is made into castings about 2½ feet long and about ½" thick which then are rolled in the hot state to reduce the thickness to about 1/6 of an inch. These rolled bars are called bus bars. The bus bars are punched in a die on power press into hexagonal pieces or circular pieces. After lubrication with graphite, they are impact extruded in extrusion presses into cans. These cans after trimming form the body of the dry cell batteries, the anodes, The process is enough to show us that the punched hexagonal/circular round pieces are not pellets but are flat symmetrical pieces designed to fit into the female extrusion press die. A pellet will not suit this purpose, because it does not have the symmetrical shape of a calot to fit and to take the impact of the die in such a way that a can of uniform thickness extrusion requires an object with even symmetry both in its linear measurements as well as in its thickness. On the other hand, a pellet is:
(i) any (small) glove, ball or spherical body; a bolus pil etc.
(ii) a ball, usually of stone, used as a missile during the 14th and 15th century and shot from mortars etc.; later, a bullet; now applied to small shot (Shorter Oxford English Dictionary).
7. A pellet is:
a small, cylindrical compressed mass of live stock feed;
a small spherical or cylindrical body.
(Mcgraw-Hill Dictionary of Scientific and Technical Terms).
8. The matter placed within the female die to be impacted, must be flat and even so that the surface of the male impacting punch and the bottom of the recipient female punch both compress on equivalent density of metal at all points for the best results. The smoothness and evenness and finish of the product depends on this principle. A cylindrical or spherical pellet will not present such a surface to corresponding punches to produce a can of smooth, even thickness and surface; and because of the uneven character of the products, there is bound to be greater loss of material, necessitating higher proportion of remelting, recycling and reprocess, which, in modern industries are unacceptable retardants. Spherical or cylindrical pellets can, in technical sense, be used, but in practice, factories prefer the flat, even, uniform shaped calots, whether hexagonal or round.
9. The goods that are in dispute are calots and they have only one use, and, that is, impact extrusion into dry cell battery cans. For this purpose, they have received special treatment from the time when the zinc sheet or ingot is rolled into bus bars of even thickness, from which the calots are punched. The punched calots are lubricated with graphite, a treatment necessary to prevent the zinc sticking to the sides of the dies and to facilitate the surge of the metal up the sides into the space between the two companion punches. In our opinion, it would not even be an argument that pellets, that is to say, spherical or cylindrical masses of zinc, can be impacted in the punch die to produce the desired cans. What we have before us are calots, land being calots, they must be assessed to duty under Central Excise Tariff Item 26B(2a). It may be true that the calots are not sold and that they ar only an intermediate product in the manufacture of zinc battery cans from zinc ingots/plates. The law requires calots to be assessed to duty and has provided therefore a specific heading under the Central Excise Tariff. When this is the case, it will not be possible for us to accept an argument that the goods are intermediate goods, that they are not sold in the market and hence not excisable. When the law specifies an article as excisable, it must yield to excise levy, and we order accordingly.