Customs, Excise and Gold Tribunal - Delhi
Shri S.V.S. Khand Udyog Mandli Ltd. vs C.C.E. on 31 July, 1995
Equivalent citations: 1995(79)ELT283(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. The appeal involves the question whether the appellants, herein, would be eligible to claim exemption under Notification 118/75 for the steel tanks manufactured within their sugar factory for the purpose of storing molasses, which is a by-product of theirs. The relevant portion of the notification runs as follows:
"...the Central Government hereby exempts goods falling under Item 68 of the First Schedule to the Central Excises & Salt Act, 1944, manufactured in a-factory and intended for use in the factory in which they are manufactured, or in any other factory of the same manufacturer, from the whole of the duty of excise leviable thereon :
* * * * * * * * Provided further that nothing contained in this notification shall apply to complete machinery manufactured in a factory and meant for producing or processing any goods, even if they are intended for use in the same factory in which they are manufactured...."
2. The appellants claimed this exemption in a classification list filed by them in 1983 for the steel tanks used for storage of molasses in their factory which were got fabricated by them inside the factory by welding of thick steel plates got done by job workers. The Assistant Collector of Central Excise, Surat-H Division by his order dated 4-7-1983 approved the classification list without granting them the exemption. The Assistant Collector found,"...The molasses tank fabricated by them is neither a component part nor intermediate product which is ultimately utilised in the manufacture of final excisable goods. The benefit under the notification is applicable in the case where the goods are utilised in the same factory or the factory of the same manufacturer, and it should be in the manufacture of final excisable goods. This condition of the notification has not been fulfilled by the factory because the purpose of the molasses storage tank is something-else. Apparently, it cannot be said to be a component part or intermediate product". The Assistant Collector's order was upheld by the impugned order dated 16-10-1986 passed by the Collector of Central Excise (Appeals), Bombay.
3. On hearing Shri Thakorbhai Vashi, ld. Consultant for the appellants and Shri P.K. Jain, ld. SDR for the Revenue, we are of the view that the interpretation of the terms of exemption under Notification 118/75 by lower authorities is fallacious. A perusal of the notification extracted above would show that the first condition is that the goods, in question, should have been manufactured in the factory and should be intended for use in the factory in which they are manufactured. Here, undoubtedly, the tanks are fabricated in the appellants' sugar factory and admittedly, they are intended for use in the appellants' factory as storage tanks for molasses which is their by-product. There is no stipulation that such use should be as component part in the manufacture of final product. The proviso to the notification which bars the exemption covers only complete machinery manufactured in a factory meant for producing or processing any goods even if they are meant for use within the factory of manufacturer. The storage tanks in the present case are, even according to the lower authorities, not meant for production work, nor do they participate in any process of manufacture. Therefore, denial of exemption under Notification 118/75 for reasons given by the lower authorities in this case is not in order having regard to the terms of the exemption. In this view of the matter, the impugned order is not sustainable and is set aside and this appeal is accordingly allowed.