Customs, Excise and Gold Tribunal - Delhi
Upadhaya Valves Manufacturers Pvt. ... vs Collector Of Central Excise on 8 April, 1988
Equivalent citations: 1988(17)ECC36, 1988(17)ECR703(TRI.-DELHI), 1988(36)ELT113(TRI-DEL)
ORDER H.R. Syiem, Member (T)
1. The appellants did not appear. By their letter VNU/86-87/4269 dated 21st September, 1987, they said they did not wish to appear before the Appellate Tribunal and requested the case to be decided on merits in their absence.
2. In their appeal, they listed a number of grounds to show that the order of the Collector of Central Excise (Appeals), Calcutta, No. 1129/ Cal/83 dated 21-11-1983 was erroneous. The goods they manufactured, cast iron pipe fittings, with socket or with flange, were nothing but iron castings falling under Central Excise tariff item No. 25. They make the fittings in their foundry. The smoothing or levelling or polishing of the flange does not change the characteristics of the iron casting, and it remains a pipe fitting; and making of holes will not change it from cast iron pipe fitting into a part of a machine. The Collector (Appeals) failed to appreciate that the Central Board of Excise and Customs by letter No. B-35/21/75-TRU, dated 23-9-1975 held that if the crude article, forged product or casting is machined or polished so as to convert t into an identifiable machine part, the machine part will fall in tariff item 68. If the machining, polishing, etc. does not convert the crude, forged product or crude casting into an identifiable machine part, it would not fall under tariff item 68. Their product is an iron casting in the shape of pipe fitting and remains so even when the face of its flange is smoothened, polished or holes are made in it. Such operations do not convert the castings into any identifiable machine parts; it remains under its operation item 25.
3. The Collector (Appeals) said that the operation, though very minor, renders the product fit for immediate use and as a result it is to be treated as an identifiable part of machine, viz., for joining two pipes. The department of revenue clarified in its letter No. 139/48/79 dated 26-9-1980 that if iron or steel castings are machined/polished without converting the same into identifiable machine parts, the same would fall under item 25 or 26AA and not under 68. The Collector (Appeals) failed to point out the machine of which their goods can be taken as parts.
4. Item 68 covers only all other goods not elsewhere specified and, therefore, the cast iron fittings cannot fall under 68 as they are specified in item 25. The Central Board of Excise and Customs in its letter No. 136/1/76-CX.4 dated 21-1-1976 ruled that duty on iron castings would be under item 25 in view of the expression iron caste in any other shape or size in the tariff description where such items are made from duty paid pig iron, which also falls under the same tariff heading. Further duty should not be charged on them. As they are covered by item 25, there could be ho question of levy of duty on them under item 68.
5. The socket headed pipe fittings and flange pipe fittings are used in joining pipes and both products are CI products and not any machine parts.
6. The learned SDR, however, agreed with the order of the Collector that the goods are assessable under item 68.
7. But I am afraid every one is mistaken. The goods are indeed assessable under item 68 but not for any of the reasons advanced in these proceedings.
8. I will reproduce item 25 before I begin the discussion. It read :
IRON IN ANY CRUDE FORM INCLUDING PIG IRON, SCRAP IRON, MOLTEN IRON, OR IRON CAST IN ANY OTHER SHAPE OR SIZE.
The Appellants take this tariff description to mean that any cast shape Of iron will fall under this heading. And so did the Board in its letter dated 21-1-1976 when it said that iron castings would fall under tariff item 25 in view of the expression "iron cast in any other shape or size", in the tariff description. The tariff heading does not accommodate iron cast in any shape or size : only iron cast in any shape if_ that shape is iron in any crude form. Note carefully that the heading is not of iron case in any other shape, but of iron in any crude form. To understand the item properly, we must read it as follows :
IRON IN ANY CRUDE FORM (INCLUDING PIG IRON, SCRAP IRON, MOLTEN IRON OR IRON CAST IN ANY OTHER SHAPE OR SIZE).
Whatever the shape or the size, it must be a crude form; and the pig iron, scrap iron or molten iron are examples of the crude forms which are to be included in the heading. None of the included forms is a form which is the result of working or shaping to produce utility product, a product which can be used in the form in which it is cast with or without machining, processing etc. The included forms can be made into products or are melted so that they can be worked or shaped into products for use in other than the manufacture of further products. Pig iron, molten iron and scrap iron are not utility products in themselves since products are to be made from them. They are only for melting or further casting into shapes or forged and given forms in which they find specific application and use. In other words, they are in crude, unwrought, unworked, unuseable forms.
9. When iron is cast to make a pipe fitting, the resulting product has become a utility product and finds ready use and application as a pipe fitting in joining pipes. It may require some further polishing, grinding and working; and even though there may be a case for saying that it is nothing but a casting, it is at a stage far advanced from the crude form. In fact, the pipe fitting casting was cast from crude iron like pig i-on, molten iron, scrap iron, all of which are iron in crude form. The pipe fitting casting left its crude form when it took the shape of a pipe fitting. The appellants themselves say that a little work such as smoothing, levelling or polishing of the flange was done on the products and that this would not change their character as pipe fittings; and they never said a truer words. But a pipe fitting will not be accepted as a piece of crude iron, or iron in crude form.
10. In other words, the pipe fitting has left its parent home in item 25 and consequently it can find shelter only in item 68. The assessment under item 68, therefore, is correct.