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Maha Shakti Industries Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)LC368Tri(Delhi)
AppellantMaha Shakti Industries
RespondentCollector of Central Excise
.....after passing through colour solution and under thin rollers at the bottom which act as pulley for cloth.the roller c rotates automatically due to tension in cloth i.e. cloth itself acts as a rotating belt for roller c and thin rollers placed at bottom act as pulley for the cloth. this process is repeated till the cloth is dyed to desired fastness of colour.for the easy motion of rollers -ball bearings are installed on the axles of rollers, which reduces the friction and hence more work can be done by applying less energy. thus manual energy is transformed into mechanical energy through jigger, hence jigger is a machine as per definition of machine in webster's new international dictionary second edition...".shri sachar also relied on the definition of "machine" as given in webster's new.....
1. This appeal is against the order dated 16-9-83 of the Additional Collector of Customs and Central Excise, Jaipur, in which he had held that central excise duty was payable on processed/dyed fabrics manufactured by the appellants during the period 30-4-82 to 17-6-82 and that they were not entitled to exemption in terms of Notification No.130/82-C.E., dated 20-4-82.

2. The aforesaid notification exempts cotton fabrics falling under Item 19-I of the Central Excise Tariff Schedule from basic excise duty and also excise duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, subject to certain conditions. The material conditions are the following:- (1) the fabrics should be processed without the aid of power or steam; and (2) they should not have been subjected to the process of bleaching, dyeing or printing with the aid of machines.

(However, the second disqualification would apply only if the quantity of fabrics falling within this category exceeds certain specified limits).

3. It is admitted that the appellants were using in their factory what they have called "hand driven jiggers", that is, jiggers which were operated by manual labour of workers. It is their case that the use of these jiggers did not attract any of the disqualifications under the above notification. As against this, it has been held by the Additional Collector that these jiggers, although worked by manual labour, were nevertheless "machines" within the meaning of the notification and therefore fabrics processed with the help of these jiggers were hit by the disqualification and attracted the duty liability.

4. At the hearing, a preliminary question arose whether the appellants could be permitted to file certain photographs which according to them they were doing pursuant to a request by the Senior Departmental Representative, Shri Tayal, when the matter came up on a previous occasion, Shri K.C. Sachar, who was representing the Department when the matter was heard by us, stated on behalf of Shri Tayal that the latter had not made any such request. Subsequently it transpired that the particular photograph which clearly illustrated the function of the jigger had apparently been taken at the instance of the Central Excise authorities and that both sides wished to rely on this photograph. As it was helpful in considering the main point before us, we have taken this photograph on record.

5. On behalf of the appellants, Shri Gupta argued that the appellants were processing cotton fabrics. The processes carried out were bleaching and dyeing. No power or steam or machine was used in the process of bleaching. In the process of dyeing, no power or steam was used. A jigger was used, but according to him the jigger was not a machine. In this connection, Shri Gupta cited the following definitions of "jigger" and "machine" :-Jigger : Any appliance or mechanical device, a contraption (page 268-Webster's Universal Dictionary).Jigger (Mech): A mechanism which operates with quick up and down motion,a jolting device, a Potter's wheel (page 231- Dictionary of Technical Terms-11th Edition, by F.S. Cripsin).Machine: A device for transformation or transferring energy. (Dictionary of Technical Terms-11th Edition by F.S. Cripsin).Machine : A device for transmission and modifying power so as to direct motion and perform a certain kind of work.

An apparatus consisting of several parts, some of which move in a specific manner and direction and each of which is adopted for a specific function, designed to produce a desired effect.

A machine is the intermediary between the motive power and those parts which actually carry out the movement necessary to the required work (Webster's Universal Dictionary).

6. Shri Gupta explained that the jigger was used for passing the cotton fabric through the dyeing solution. It consisted essentially of rollers which were used for passing a roll of fabric gradually and completely through the dyeing solution. The roller was rotated by a handle which was turned by a worker. Shri Gupta contended that such a simple appliance could not be termed as a machine. Nor was any power or steam used for working it. Accordingly, the use of the jigger would not attract the disqualification in the notification.

7. In the memorandum of appeal reliance has been sought to be placed on a subsequent Notification No. 194-C.E./82, dated 18-6-82, which amends Notification No. 130/82. The effect of this amendment is that the disqualification connected with the use of machines applies to printing and not to dyeing. Since the appellants have been using a jigger only for the purpose of dyeing, the effect of this notification was that, even on the view taken by the Department that a jigger was a machine, they did not attract the disqualification in the notification. The Department also appears to have accepted this position with effect from 18-6-82. In the memorandum of appeal a ground has been advanced that Noti" fication No. 194/82 should be considered as only clarifying Notification No. 130/82, and that the benefit given to the appellants in view of Notification No. 194/82 should have been given to them from the beginning. This argument, which is tantamount to saying that Notification No. 194/82 should apply retrospectively, obviously has little force, and Shri Gupta did not press it during the hearing before us. We are not therefore dealing further with it.

8. Shri Gupta further submitted that, even if the Department's view was upheld and the appellants were held liable for payment of duty, there was no case for imposing a penalty of Rs. 5,000 on them, as the Additional Collector had done, since there was no mala fides on their part.

9. Replying for the Department, Shri Sachar contended that a jigger was clearly a machine. It was not necessary that a machine should be worked by power or steam. Shri Sachar placed before us a description of the jigger used by the appellants and illustrated by the photograph referred to earlier. Since the description is useful in appreciating the point at issue, it is reproduced below :-"Jigger consists, of following parts indicated in photo-details as under :-A- Tub at the bottom of this tub two thin rollers are installed in parallel which acts as pulley. The Tub is filled with colour solution.B- Thick Roller which is clamped through Ball bearing at D and Rotated by handle E and Dyed cloth wrapped on it.C- Thick Roller which is clamped through Ball bearing and not connected by handle, undyed cloth wrapped on it.D- Place indicating where Ball bearings clamp the rollers. E Handle.

The Tub is filled with colour solution and cloth which is to be dyed is wrapped on Roller C. One end of the cloth is clamped on Roller B-through thin rollers installed in the bottom of the tub. The roller B is rotated with help of handle E. The cloth keeps on wrapping on roller B after passing through colour solution and under thin rollers at the bottom which act as pulley for cloth.

The roller C rotates automatically due to tension in cloth i.e. cloth itself acts as a rotating belt for Roller C and thin rollers placed at bottom act as pulley for the cloth. This process is repeated till the cloth is dyed to desired fastness of colour.

For the easy motion of rollers -Ball bearings are installed on the axles of rollers, which reduces the friction and hence more work can be done by applying less energy. Thus manual energy is transformed into Mechanical energy through Jigger, hence Jigger is a machine as per definition of machine in Webster's New International Dictionary Second Edition...".

Shri Sachar also relied on the definition of "machine" as given in Webster's New International Dictionary, Second Edition, which reads as under :- "Any device consisting of two or more resistant, relatively contained parts, which by certain pre-determined intermotion, may serve to transmit and modify force and motion so as to produce some given effect or to do some motion desired kind of work. According to the strict definition a crowbar, abutting against a fulcrum, a pair of plier in use or a simple pulley block with its fall would be machine. Popularly and in the wider mechanical sense, a machine is a more or less complex combination of mechanical parts as lever, gear, sprocket wheels, pulley. Shafts and spindles, ropes, chains and bands, cams and other turning and sliding pieces, confined fluids etc. together with the frame work and fastening, supporting and connecting them as and when it is designed to operate upon material to change it in some pre-conceived and definite manner to lift and to transport loads etc. A sewing-machine, a paper making machine, a printing machine are examples." (The quotations furnished by both sides contain typographical errors.

Only the more obvious errors have been corrected).

10. The short point in this case is whether a jigger can be regarded as a "machine". The wording of Notification No. 130/82 makes it clear that a machine for the purposes of the notification need not be worked by power or steam; otherwise, there would have been no need, after the first condition referred to in para 2 above, to impose a second condition. The argument of the appellants really amounts be saying that such a simple contrivance as a jigger cannot be regarded as a machine, and that a machine has to be something complex. We are unable to accept this view. No doubt the machines which we ordinarily come across are somewhat complex articles. But if one looks at the definitions given by the appellants themselves, it would be clear that a machine need not necessarily be complex. Thus, the first definition given by them reads as "a device for transformation or transferring energy". In the present case what is required to be done is to pass a long roll of fabric slowly and completely through a dyeing solution. This process, like any other physical or mechanical process, requires energy. That energy is furnished by a worker who turns a handle attached to one of the rollers. The arrangement of the rollers, the manner in which the cloth is wound on one roller, taken under a second, and brought up and wound around a third, so that it forms a continuous belt, has the effect of directing and using the energy supplied by the worker in such a way as to carry out the required process. Clearly energy in this case is transferred from the handle to the roller and from the roller to the fabric and from the fabric to the other rollers in order to perform the desired process. The jigger would equally satisfy the second definition relied upon by the appellants themselves, namely, that of being "a device fot transmission (transmitting ?) and modifying power so as to direct motion and perform a certain kind of work". In fact, it clearly satisfies all the definitions given by the appellants themselves. The only definition which could raise a doubt is the third one which refers to "an apparatus consisting of several parts...". It might be asked whether the jigger could be considered as ah apparatus consisting of several parts. The answer to this is contained in the description given by Shri Sachar which shows that apart from the rollers and the handle, there are also ball bearings which are meant to facilitate easy motion of the rollers. The jigger cannot therefore be considered as an altogether simple contrivance. But even otherwise, as we have already observed, it is not necessary that a machine should be a complex article. In fact, the classic examples of a machine, such as a lever or a pulley, or even a wedge, are actually referred to as "simple machines". In the present case there is in fact a pulley arrangement by which the revolution of one roller with the aid of a handle results in the revolution of two other rollers. We therefore find it established beyond any doubt that the jigger used by the appellants was a machine and that accordingly the interpretation adopted by the Additional Collector was correct.

11. On the question of penalty, it has been contended that there was no mala fides on the part of the appellants. It is argued that the appellants were under a genuine belief that they are not liable to pay duty. We observe that such an argument could be advanced by any manufacturer who fails to take out a licence or pay duty. We do not think such a plea is sufficient in itself to establish a plea of bona fides. It would have been different if the appellants had on their own accord sought a clarification from the excise authorities. There is however no claim that this was done. The penalty imposed, namely Rs. 5,000, amounts to less than one-fourth of the amount of duty involved and cannot be considered as excessive or unreasonable.

12. Shri Gupta finally put forth an argument that in any event the hand-loom cess should not have been levied on the fabrics processed by the appellants. This point does not seem to have been raised before the Additional Collector, nor has it been discussed in his order. We are not therefore able to deal with it in detail. Since dyeing is also a process of manufacture, it cannot be said that the levy of handloom cess on fabric which had been subjected to dyeing was illegal provided the handloom cess had not been levied at an earlier stage. Since the full facts in this regard have not been placed before us, nor has this aspect been the subject of the consideration in the order of the Additional Collector, we would only observe that if the appellants can show that the fabrics in question had already been subjected to handloom cess, they would not be liable to a further levy of handloom cess. Subject to this observation, we reject the appeal.

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