1. M/s Union Carbide India Limited, hereinafter referred to as the Company, filed a revision petition dated 30th October 1980 before the Central Government on 6th November, 1980, under Section 36(1) of the Central Excises & Salt Act, 1944, hereinafter referred as the Act, against the Order No. 1367/80 dated 21st May, 1980, passed by the Appellate Collector of Central Excise, Madras. The related order of the Asstt. Collector of Central Excise, Madras II Division, Madras is of 14th of August 1978, bearing No. CV/51 A/3/31/77 dated 14.8.1978. The revision petition has been transferred to us under Section 35P of the Act as an Appeal and is accordingly being disposed of as such.
2. To understand the dispute, for adjudication before us, some basic facts must necessarily be noticed and which are that consequent on the imposition of Central Excise duty on different types of tools falling under Tariff Item 51-A as per Finance Act, 1977, the Company filed a classification list for the tools they were manufacturing. However, it excluded the extrusion punches from their classification list No. 1/77 on the ground that they would not fall under any of the sub items, and that Can Extrusion Punches manufactured by it were part of the equipment "Can Extruder" by which zinc callot was made into a Can and that these could not by themselves be construed as extrusion dies for metals. The Company also pleaded that the extrusion dies for metals would cover only those used for extrusion of bar stock angle iron. When the, Excise Authorities insisted upon the excisability of punches manufactured by the Company, a letter was filed along with a classification list No. 2/77 both dated 22nd August, 1977, under protest.
3. The Company was served with a Show Cause Notice dated 26th of June, 1978 for classification of Extrusion Punches manufactured by it under Tariff Item No. 51-A (iii). The Company replied to the Show Cause Notice on 15th of July 1978 and though resisted the classification of Extrusion Punches under Tariff Item 51-A(iii), but failed, The, Assistant Collector ordered vide Order dated 14th of August, 1978 that Can Extrusion Punches manufactured by the Company be classified as tools falling under Tariff Item 51 (A) (iii) and vacated the protest.
4. The Company's first appeal filed before the Appellate Collector of Customs & Central Excise, Madras also fell and in this connection, last para of the Order of the first Appellate Authority is noticed below: I have gone through the records of the case, the points contained in the appeal petition and those advanced at the time of personal hearing. As per B.T.N. the term 'machine tool' includes such machine tools for changing the shape or form of the metal without removing any of it. In the Can manufacturing machine zinc callots are shaped into cans. As per the above definition of B.T.N. the 'Can manufacturing machine' could be considered as a machine tool and the extrusion punches which is fitted to it i.e. to the 'can manufacturing machine' would therefore, fall under Item 51(A)(iii) of Central Excise Tariff. Even under Engineering Encyclopaedia quoted by the appellants, machine tool' is any power driven non-portable machine designed primarily for shaping and sizing metal parts. The 'Can manufacturing machine' are primarily for shaping the zinc callots into cans. The list of machine tools cited from McGraw Hill Encyclopaedia of Science and Technology is not an exhaustive list and therefore, non-inclusion of the 'Can manufacturing machine' cannot be taken to mean that it is not machine tool. With the result I find no reason to interfere with the orders of the Assistant Collector. The appeal is, therefore, rejected.
5. Before us, Shri S. Mahapatra, Manager, Indirect Taxation of the Company, made two submissions which were alternative in character.
Firstly, he contended that Extrusion Punches is not a tool because it did not have the necessary characteristics of any tool as it was a simple punching rod. Secondly, and which was an alternative argument, Can manufacturing machine being not a machine tool but a production machine is commonly known in the Trade parlance, Extrusion Punches fitted to such production machine could not merit classification under Item 51-A (iii) of the Central Excise Tariff. Elaborating his arguments, Shri Mahapatra stated that Extrusion Punches are made for the use on the machine known as Can making machine - a manufacturing equipment for the mass production of dry battery zinc cans.
6. For the Revenue, Shri K.D. Tayal, St. D.R. with equal force pleaded that it was entirely wrong for the appellant's representative even to urge that Extrusion Punches could not be termed as a tool. According to Shri Tayal, machines producing battery can should be held to be machine tool and for his submission he placed reliance on Brussels Tariff Nomenclature Chapter 84.45.
7. To understand the respective view points of the parties, we advert to Tariff Item No. 51-A and closely bring in focus its wordings and for that purpose the description is reproduced below : Pliers (including cutting pliers) spanners, wrenches, files and rasps, screw drivers (including ratchet types); (ii) Tools for working in the hand pneumatic or with self-contained non-electric or electric motor ; (iii) Tools designed to be fitted into hand tools, machine tools or tools falling under sub-item (ii), including dies for wire drawing, extrusion dies for metals and rock drilling bits ; 8. From the above, we notice that admittedly the Extrusion Punches manufactured by the Company would not fall under sub-heading (i), (ii) or (iv). Therefore, only sub-heading (iii) would be relevant for our purposes. As far as the first argument for the appellant that Extrusion Punches cannot be termed even a tool does not merit serious consideration, and therefore agreeing with Shri K.D. Tayal we go with the Revenue that Punches manufactured by the Company are tools. The next question which falls for I our consideration is whether Can making machine can be said to be a machine tool. In Encyclopaedia Britannica, Machine Tool is defined as under: Of the many power-driven tools developed by man, Machine tools are probably the most important because it is by means of them that other tools such as those for earth working, materials handling, etc. are made. They are important also because they have made it possible to produce identical parts shaped to sufficiently precise dimensions as to provide complete interchangeability. It is interchangeability of parts that has made possible the assembly of products on a mass production scale and the quick and inexpensive replacement of work and broken parts.
1. Lathe, 2. Drilling Machine; 3. Milling Machine, 4. Planer or Shaper ; 5. Shearing Machine and Press, 6. Grinder.
9. In Me Graw Hill Encyclopaedia of Science and Technology, list of machine tools mentioned is as follows : 1. Drilling machine, 2. Vertical lathe, 3. Horizontal Lathe (engine, turret, screw m/c), 4. Boring machine (horizontal), 5. Boring machine (vertical), 6. Broaching machine, 7. Grinder (cylinderical), 12. Grinder (surface), 13. Nibbing Machine, 14. Saw (circular), 15.
Saw (Band), 16. Flame cutter.
10. In Engineering Encyclopaedia, definition of machine tools is as given below: The machine tool is a power driven machine that is used in building other machinery. However, there are many other power driven machines used for this purpose which are not classified as machine tools. In order to obtain a more specific definition, machine tools have been defined as machines which, when taken as a group, will reproduce themselves.
11. The definition in the Engineering Encyclopaedia in our opinion is a proper and befitting definition of machine tool.
12. There is no dispute that the machines to which extrusion punches are fitted produce zinc can only. However, for the Revenue, support was attempted to be drawn from Chapter 84.45 (iii) of B.T.N. item 7, wherein complex machines for manufacturing boxes, cans and other similar containers of tin plate, even if incorporating soldering devices, are stated to be machine tools. Now, at no stage, the Revenue has alleged or tried to prove that the appellant's machines were complex machines. Before us also, no explanation was forthcoming from the Revenue as to why definition of machine tools was not taken from BTN as such. Further, in BTN, only complex machine manufacturing containers of tin plate, is stated to be machine tool. Whatever may be the reasons which promoted the said definition in BTN, we do not find any justification to extend that definition any further and bring the appellant's machine manufacturing zinc can within the terminology of machine tools.
13. We accordingly reverse the Appellate Collector's Order insofar as he has held the machinery in which Extrusion Punches were fitted as machine tools. Our finding and decision is that the appellant's manufacturing machines producing zinc cans or dry battery cell could not be termed as machine tools because they were not producing any machinery or machinery parts of any kind. The said machinery has not even been alleged to be a complex machinery. The extended definition of BTN that complex machine manufacturing containers of tin plate would also come within the ambit of machine tool also does not come to the Revenue's rescue. At the same time, we are rejecting the assessee's contention that Extrusion Punches could not be considered as tools.
Since the Punches were fitted in the machine cans and it was primarily the function of the Punches to give a cylinderical shape to the zinc cans, these were necessarily tools and not mere accessories or components of the machine as such, Since according to us the Punches could not be assessed under the Tariff Entry Item 51-A, they would go under the general heading Tariff Item No. 68 and subjected to duty at the rates applicable at the relevant times. The assessments involved, therefore, shall be modified on the basis indicated above and refunds granted if recoveries had been made on the basis of the Extrusion Punches being classified under Tariff Item No. 51 -A.1. I have carefully perused the order of my learned colleagues. With respect, I have to disagree with their conclusion for the reasons discussed in the following paragraphs.
2. I agree with the finding of my learned colleagues that extrusion(ranches manufactured by the appellants are "tools". I would draw support or this conclusion from the Explanatory Notes under Heading No. 82.05 of the Customs Cooperation Council Nomenclature (CCCN) on the basis of which sub-item (iii) of Item No. 51-A of the Central Excise Tariff Schedule (CET) is based, with some adaptations.
Extrusion dies for metal are covered specifically under both Heading No. 82.05 of the CCCN (the corresponding heading in the Indian Customs Tariff Schedule is also 82.05) and sub-item (iii) of Item 51-A of the CET. Now, these extrusion punches are admittedly used in the appellants' factory for extrusion of zinc callots in in the form of cans for manufacture of dry cells. The extrusion punches are, therefore, covered by the expression "Extrusion Dies for Metals".
Unlike in the CCCN, the concept of inter-changeability does not apply in the case of Item 51-A (iii) of the CET. The said sub-item (iii) reads as follows: Tools designed to be fitted into hand tools, machine tools or tools falling under sub-item (ii) including dies for wife drawing, extrusion dies for metals and rock drilling bits.
[Sub-item (ii) referred to in sub-item (iii) is not relevant for the present purpose]. Having come to the conclusion that extrusion punches are covered within the expression "extrusion dies for metal", the only point remaining to be considered is whether the can making machine to which the said extrusion punches are fitted is a machine tool or not for the purpose of the said sub-item. If the answer is in the, affirmative, then the subject "extrusion punches" clearly fall under the said sub-item (iii) of Item 51-A.3. Now one must note here that the nomenclature adopted for sub-item (iii) of Item 51-A of the CET closely follows the nomenclature adopted in the CCCN in material particulars. It has already been noted that the concept of inter-changeability has not been imported into the CET item.
Heading 82.05 of the CCCN reads thus: 82.05Interchangeable tools for hand tools, for machine tools or for power-operated hand tools (for example, for pressing, stamping, drilling, tapping, threading, boring, broaching, milling, cutting, turning, dressing, morticine, or screw driving), including dies for wire drawing, extrusion dies for metal, and rock drilling bits.
While the Explanatory Notes to the CCCN have no legal and binding force, they have considerable persuasive value in that they represent the accumulated wisdom of an international body. Further, as noted earlier, the CET Item is patterned on the CCCN heading 82.05 with some adaptations. It would, therefore, be permissible to look into the Explanatory Notes in the CCCN for determination of the scope of the expression "machine tools" in sub-item (iii) of Item 51-A CET. Now, heading 84.45 deals with "Machine tools for working metal or metal carbides...". In the Explanatory Notes under the said heading are included "machine tools for changing the shape or form of the metal without removing any of it" and "machine tools" of this category specialised to a particular product. In an illustrative list of machine tools which falls within this heading is included "complex machines for manufacturing boxes, cans and other similar containers of tin plate, even if incorporating soldering devices". -The appellants have not contended that the machine which they employ is not a "complex machine". However, during the hearing they have made much of the fact that the aforesaid illustrative list talks of machine for manufacturing cans of tin plate and from this they seek to draw the conclusion that machines-for manufacturing cans of zinc cannot be brought within the scope of the heading. This is an erroneous view of the matter. As I have stated earlier, the list of machine tools is illustrative and there is nothing to warrant the assumption that machines for manufacturing cans of zinc would cease to be machine tools. I would, therefore, hold that the can manufacturing machine employed by the appellants in their factory is a "machine tool". Since I have already come to the finding (as also have my learned colleagues) that the extrusion punches are covered by the expression "extrusion dies for metals", the impugned goods are tools designed to be fitted into machine tools. The goods would, therefore, fall for classification under sub-item (iii) of Item 51-A of the CET. The appeal is, therefore, rejected.