Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of C. Ex. vs Interfit Techno Products Ltd. on 17 November, 2004
Equivalent citations: 2005(180)ELT124(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The respondents were engaged in the manufacture of stainless steel castings [Heading 73.25 of CETA Schedule] and stainless steel pipe fittings [Heading 73.07] during the material period. They were also manufacturing "ceramic moulds" for using the same captively for casting stainless steel ingots. They were not paying duty of excise on the captive clearances of ceramic moulds. In a show cause notice dated 17-4-1995, the department demanded duty on such clearances for the period 1-10-1994 to 15-3-1995. This demand was contested by the assessee who claimed that ceramic moulds were not marketable goods and hence not excisable. Alternatively, they argued that the goods if at all excisable were classifiable under Heading 84.30 and consequently exempt from payment of duty under Notification No. 217/86-C.E. The original authority, which adjudicated the dispute, confirmed the demand of duty against the assessee after holding that the ceramic moulds were excisable goods classifiable under Heading 69.11 and did not fall within the purview of Notification No. 217/86-CE. on account of their being in the nature of tools, appliances, etc., which were specifically excluded from the purview of the Notification. Against the decision of the original authority, the assessee preferred an appeal to the Commissioner (Appeals) and the latter set aside the demand of duty after holding that the subject goods, though marketable and excisable, were appropriately classifiable under Heading 69.11 and that, since the goods were used captively for the manufacture of stainless steel castings [Chapter 73 of CETA Schedule], they were exempt from duty under Notification No. 217/86-C.E. Hence the present appeal of the Revenue.
2. Heard both sides. Ld. SDR, reiterating the grounds of this appeal, submitted that the ceramic moulds manufactured and captively used by the respondents were in the nature of tools, appliances, etc., which were specifically excluded from the applicability of Notification No. 217/86-CE. On account of this exclusion, the goods were not 'inputs' within the meaning of this expression used in the Notification and, therefore, the benefit of exemption under the Notification was not available to them. Ld. SDR also relied on certain departmental clarifications on Notification No. 217/86 - C.E. She cited C.B.E.C. Circular No. 14/89-CX. 4, dated 11-4-1989 wherein it had been clarified that the benefit of exemption under the said Notification would not be admissible to moulds made of Plaster of Paris. A reference was also made to M.F. (D.R.) Letter F. No. 133/2/88-CX. 4, dated 11-4-1989, wherein it had been clarified that the exemption under the above Notification was not available to saggars and moulds (for captive use) which were tools or appliances and not inputs as defined in the Notification.
3. Ld. Counsel for the respondents reiterated the cross-objections filed by the party. He argued, on the strength of the Tribunal's Larger Bench decision in the case of Shri Ramakrishna Steel Industries Ltd. v. CCE [1996 (82) E.L.T. 575 (Tribunal)], that the ceramic moulds were not marketable and hence not excisable. The Revenue could not prove the marketability of the item. As regards classification, ld. Counsel argued that the goods were rightly classifiable under Heading 84.80.
4. In her rejoinder, ld. SDR submitted that the only prayer made in the respondents' cross-objections was to dismiss the Revenue's appeal and uphold the order of the Commissioner (Appeals) and therefore the Counsel could not be heard to argue on excisability and classification of the ceramic moulds.
5. We have carefully considered the submissions. The lower appellate authority has held the subject goods to be marketable and excisable. This part of the impugned order has not been effectively questioned by the respondents, who, in their cross-objections, have only prayed for upholding the order of the Commissioner (Appeals). Any pleading (in the cross-objections) which is not relevant to the ultimate prayer made by the respondents is futile. Therefore, in the present proceedings, excisability of ceramic moulds is not an issue before us. As regards classification, we find that the lower appellate authority has classified the item under Heading 69.11 as 'other ceramic articles' as proposed by the Revenue, after rejecting the assessee's claim to classify the goods under Heading 84.80. Again, this classification of the goods by the Commissioner (Appeals) is not under challenge before us. In their cross-objections, the assessee has only prayed for upholding the decision of the Commissioner (Appeals). Hence there is no classification dispute also before us. It is also pertinent to note that the rival claims before the lower authorities for classifying the subject goods are immaterial to Notification No. 217/86-C.E. ibid inasmuch as both Chapters 84 [claimed by the assessee] and 69 [claimed by the Revenue] figured in Col. No. (2) captioned 'description of inputs' in the Table annexed to the Notification. In other words, ceramic moulds, whether falling under Chapter 69 or under Chapter 84 of the CETA Schedule, used captively for the manufacture of goods falling under Chapter 73 of the Schedule, would attract the exemption under the Notification, provided the moulds could be treated as "inputs" as defined in the Notification.
6. The question, now, before us is whether the subject goods fell within the meaning of 'inputs' as defined in Notification No. 217/86-C.E. The moulds were, admittedly, used within the factory of production of stainless steel castings. They were used for casting stainless steel ingots (final product) falling under Chapter 73 of the CETA Schedule. Goods of Chapter 73 stood included as "final products" in Col. No. (3) of the Table annexed to the Notification. Obviously, the moulds were used in or in relation to the manufacture of stainless steel ingots. The question now is whether the moulds would attract the exclusionary clause of the Explanation to the Notification. This clause reads as under :-
"Explanation :- For the purposes of this notification, 'inputs' does not include -
(i) machines, machinery, plant, equipment, apparatus, tools or appliances used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products."
The original authority has held the moulds to be capital goods within the meaning of the above clause. But the lower appellate authority rejected the original authority's argument that the moulds were in the nature of tools, appliances, etc. Apparently, ld. Commissioner (Appeals) has taken the view that the ceramic moulds were to be treated as 'inputs' for the purpose of the Notification by virtue of their classification under Chapter 69 of the CETA Schedule figuring in Col. No. (2) of the Table annexed to the Notification. In the present appeal, the Revenue has contended that the ceramic moulds are in the nature of tools, appliances, etc., and hence, by virtue of the above clause, they are not eligible inputs for the purpose of exemption under Notification No. 217/86.
7. Going by common parlance, one can easily see that tools, appliances, etc. are not perishable items and are capable of being repeatedly used. It is also pertinent to note that the expressions "tools" and "appliances", in clause (i) of Explanation ibid, exist in the company of "machines", "machinery", "plant", "equipment" and "apparatus" all of which are meant to be used for "producing or processing of any goods or bringing about any change in any substance in or in relation to the manufacture of the final product". Like machines, machinery, plant, equipment and apparatus, tools and appliances also are to be seen as non-perishable, stable items of repeated utility. In the instant case, the assessee has stated in their reply to the show cause notice that a ceramic mould was used only once as it got destroyed when the casting of an ingot was over. It was not available to be used for casting a second ingot. This fact pleaded by the assessee has not been disputed by the Revenue. It can be safely inferred from this crucial fact that the ceramic moulds in question were not liable to be treated as "tools" or "appliances" or as any other item mentioned in clause (i) to the Explanation ibid. In other words, these goods did not attract the exclusionary clause under the Notification and hence would squarely fall within the ambit of "inputs" for the purpose of exemption under the Notification.
8. In the result, the order of the Commissioner (Appeals) is upheld and this appeal of the Revenue is rejected.