Chattisgarh High Court
Commissioner Customs And Central ... vs Ms Advani Oerlikon Ltd Raipur Plant on 19 November, 2012
HIGH COURT OF CHATTISGARH AT BILASPUR
CER No 16 of 2001
Commissioner Customs and Central Excise
...Petitioners
VERSUS
Ms Advani Oerlikon Ltd Raipur Plant
...Respondents
! Mr Garry Mukhopadhyay Advocate for the applicant
^ Mr Anumeh Shrivastava Advocate for the respondent
CORAM: HONBLE MR ABHAY MANOHAR SAPRE & HONBLE MR G MINHAJUDDIN JJ
Dated: 19/11/2012
: Judgement
ORDER
(Passed on 19/11/2012) REFERENCE APPLICATION UNDER SECTION 35 H 1 OF THE CENTRAL EXCISE ACT 1944 Per Abhay Manohar Sapre, J:-
(1) This is a reference application made by the Revenue (Commissioner of Central Excise) under Section 35-H(1) of the Central Excise Act, 1944 (for short called "the Act"). It arises out of an order dated 20/4/2001 passed by Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi (for short called `the Tribunal") in final order No. A/606/01-NB (SM).
(2) By impugned order, the Tribunal dismissed the appeal filed by the Revenue and in consequence upheld the order passed by the Commissioner of appeals.
(3) So the short question that arises for consideration in this reference application is whether any referable legal question arises out of the order passed by the Tribunal for being answered by this Court in its reference jurisdiction and if so whether such question need to be called to this Court to answer on its merits.
(4) Facts of the case lie in a narrow compass.
(5) The respondent (assessee) is a Company engaged in manufacture and sale of "welding electrodes". The assessee however claimed modvat credit under Rule 57-Q on one item called "Hot Melt Unit" as capital goods. According to assessee, the item Hot Melt Unit was used by the assessee while manufacturing welding electrodes and hence they were entitled to claim modvat credit on this item as capital goods under the Rules. The case of the Revenue (Adjudication Authority) was that the assessee did not use the item - Hot Melt Unit in its manufacturing process but it was used by the assessee for packing and printing the cartons for keeping the welding electrodes in the cartons. It was therefore contended that since the item was not used in its manufacturing activities but was used in packing of welding electrodes and hence it cannot be termed as capital goods and nor any modvat credit can be taken on such item under Rule 57-Q ibid.
(6) The Commissioner of appeals did not accept the interpretation of adjudicating authority and decided the issue in favour of the assessee. In appeal filed by the Revenue, the view taken by the Commissioner of appeals was upheld and in consequence, the assessee was allowed to avail of the modvat credit on the item called "Hot Melt Unit" under the Rules as claimed by them. It is against this view, the Revenue felt aggrieved and filed this application praying for calling the question from the Tribunal and then to decide the issue in Revenue's favour holding that assessee was not entitled to claim any modvat credit on the such item.
(7) Having heard the learned counsel for the parties and on perusal of the record of the case, we are inclined to dismiss the application as in our opinion, the application does not involve any referable question and the one which is proposed is not a referable one by the Tribunal to this Court. Indeed, it stands already decided by the two decisions of the Supreme Court in favour of the assessee as would be clear from our reasoning infra.
(8) This is what the Tribunal while answering the issue in favour of the assessee held in Paras 3 and 4:-
3. "The revenue have filed an appeal against the above order of Commissioner (Appeals). I have heard Shri A.K. Jain, JDR for the appellants and Shri S. Manoj, Asst. Manager for the respondents' Company. The ld. representative of the respondents has filed a copy of the order No. C-
I/3288-89/WZB/2000 dt. 21.9.2000 of West Regional Bench of CEGAT, Bombay in their own case, in which, it is observed that "apart from question of protection from moisture and other elements for which packing was done of the goods it is normal commercial practice to pack them for such purposes as identification of the manufacturer, type of goods etc. It would be irrational to accept only the view that of the Commissioner, without any support whatsoever that they could be marketed without packing. Marketability is an essential criterion for determining the liability of goods to excise duty and the process of rendering goods to market is a manufacture. The denial of the credit for this reason therefore cannot be sustained".
4. I fully agree with the view held in the above decision that the end products manufactured by the respondents cannot be marketed without proper packing and therefore the modvat credit on the impugned machine used for packing of such goods is admissible as capital goods under Rule 57-Q."
(9) Though while deciding the issue, the Tribunal did not refer to any case law on the subject, yet the view taken by the Tribunal is in accordance with the law laid down by the Supreme Court. In fact, it would have been better if the Tribunal had taken note of the law on the subject laid down by the Supreme Court and then should have expressed their view.
(10) We consider it apposite to mention that whenever, any issue is decided by the Supreme Court or/and High Court then it has to be first referred to by the Authorities/Tribunals and then decision should be rendered on the issue involved in the case keeping in view the law laid down in decided cases.
(11) In the case reported in AIR 1990 SC 1893 (Collector of Central Excise, Calcutta-II v. Eastend Paper Industries Ltd.), the question arose before the Supreme Court as to whether wrapping paper used by the assessee who is engaged in manufacture of "papers" for wrapping their finished goods - paper can be regarded as a process incidental or/and ancillary to completion of main manufactured product or not?. Justice Sabyasachi Mukherjee (as his Lordship then was) speaking for the Court held that such activity is essentially in the nature of incidental or/and ancillary to the main manufacturing activity of the finished goods and hence the assessee is entitled to the benefits contained in the exemption notification in so far as it relates to wrapping paper is concerned. This is what their Lordships held in Para-8:-
"8. To be able to be marketed or to be marketable, it appears to us, in the light of facts in the appeals, that it was an essential requirement to be goods, to be wrapped in paper. Anything required to make the goods marketable, must form part of the manufacture and any raw material or any materials used for the same would be component part for the end product. In our opinion, the Tribunal was right in the view it took. There is no ground to interfere in these appeals."
(12) Similarly, the Supreme Court in the case reported in AIR 2005 SC 4043 (Dharampal Satyapal v. Commissioner of Central Excise, Delhi- I, New Delhi) while dealing with some what similar issue speaking through Kapadia J. (as his Lordship then was) for the Court held as under in para -18:-
"18. We do not find merit in the above submissions.
Marketability is an attribute of manufacture. It is an essential criteria for charging duty. Identity of the product and marketability are the twin aspects to decide changeability. Durability of the product depends on whether the product is known to the market. The test of marketability is that the product which is made liable to duty must be marketable in the condition in which it emerges. Marketable means saleable. The test of classification is, how are the goods known in the market.
These tests have been laid down by this Court in a number of judgments including Moti Laminates Pvt. Ltd. v.
MANU/SC/0658/1995: Collector of Central Excise, Ahmedabad 1995ECR1 (SC); Union of India v. MANU/SC/0619/1997: Delhi Cloth & General Milk Co. LTD.
1997(92) ELT315(SC); Cadila Laboratories Pvt. Ltd. v.
MANU/SC/0105/2003:
Commissioner of Central
Excise, Vadodara 2003(152)
ELT262(SC)."
(13) Applying the aforementioned test laid
down by the Supreme Court to the facts of this case, we find that the item "Hot Melt Unit" was admittedly used by the assessee while packing their finished goods - "welding electrodes".
Since packing is held to be one of the essential components of the manufacturing process of the finished goods and being in the nature of incidental or/and ancillary to the main manufacturing activity, the assessee in this case was rightly held entitled to claim modvat credit on the item - "Hot Melt Unit" treating the same as capital goods under the Rule 57-Q ibid for claiming benefit.
(14) In our view since the issue sought to be urged by the applicant (revenue) no longer remains resintegra and stands decided by the two decisions of the Supreme Court in favour of the assessee no referable question of law arises in the case. In other words, the view taken by the Tribunal is in accordance with the law laid down by the Supreme Court in aforementioned two decisions and hence this is not a fit case for calling any question proposed by the applicant from the Tribunal.
(15) In the light of foregoing discussion, the reference application fails and is accordingly dismissed.
No costs JUDGE