Skip to content


Elcen Machines Pvt. Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(19)ELT418TriDel
AppellantElcen Machines Pvt. Ltd.
RespondentCollector of Central Excise
Excerpt:
.....using monoblock pumps cleared any motor. sh. mehta explained that in the manufacture of monoblock pumps rotors and stators are used and motor as such does not come into existence. the appellants' admission in the documents that they had used electric motors for making mono-block pumps was clearly an error.they had only used rotors and stators. sh. lakshmi kumaran for the respondent agreed that in monoblock pumps, there is no electric motor as such but submitted that rotors and stators are parts of electric motors and tariff item no. 30 of the c.e.t. is wide in terms covering electric motors all sorts and parts thereof. in view of the above arguments of sdr, even if in the monoblock pumps there be no electric motor and it be found that rotors and stators are parts of electric motors then.....
Judgment:
1.Questions for decision in this appeal to the Tribunal is whether the appellants during the period 1-4-1980 to 31-3-1981 exceeded clearances stipulated under Notification No. 80/80-C.E., dated 19-6-1980, so as to disentitle them from concession under the notification for the period 1-4-1981 to 30-9-1981.

2. Notification No. 80/80-C.E. granted exemption to small scale manufacturers in the matter of Central Excise duty. The notification was not applicable to a manufacturer : (i) if the aggregate value of clearances of the specified goods, if any, by him or on his behalf, for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees fifteen lakhs ; (ii) who manufactures excisable goods falling under more than one Item Number of the said First Schedule and the aggregate value of clearances of all excisable goods by him or on his behalf, for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees twenty lakhs.

3. It is common ground that in the case of the appellants clearances of specified goods are attracted and if the appellants' clearances exceed Rs. 15 lakhs, the appellants would be liable to pay differential duty as demanded.

4. Appellants availed of exemption under the Notification for the period 1-4-1980 to 30-11-1980 and 1-4-1981 to 30-9-1981 declaring the preceding years' clearances to be within the stipulated limit. Excise authorities issued three show cause notices dated 28-12-1981, 29-11-1981 and 4-11-1981 respectively demanding differential duty for the periods 1-4-1980 to 30-11-1980 1-4-1981 to 31-8-1981 and 1-9-1981 to 30-9-1981 alleging that appellants had wrongly availed of exemption as their clearances exceeded the limit of 15 lakhs. The appellants challenged the show cause notices raising the various defences. The Assistant Collector of Central Excise, Baroda (Dn. II), however, found against the appellants and confirmed the demand. In appeal, the Collector of Central Excise (Appeals), Bombay set aside the demand for the period 1-4-1980 to 30-11-1980 amounting to Rs. 1,52,425.13, as time-barred but upheld the remaining two demands for the period 1-4-1981 to 30-9-1981. He also directed that proforma credit of duty paid Electrical stampings used in the manufacture of Rotors and Stators under Rule 56A of Central Excise Rules be given to the appellants for the aforesaid period after necessary verification.

5. Appellants eligibility to concession under the notification for the period 1-4-1981 to 30-9-1981 would have to be determined on the basis of preceding financial year 1-4-1980 to 31-3-1981 clearances. It is to be seen whether the appellants during the period exceeded the limit of Rs. 15 lakhs.

For the financial year 1980-81 (1-4-1980 to 31-3-1981), data furnished by the appellants is as under :--------------------------------------------------------------------------------Sl.No Description of item 1980-81--------------------------------------------------------------------------------1 Electric Motors clearance consumption for making 6,51,138.50 monoblock pumps.

Rs. 19,94,582.05--------------------------------------------------------------------------------- 6. At the hearing of the appeal, Sh. N.I. Mehta, learned Advocate for the appellants, argued that Electric Motors were used for making Monoblock pumps were captively consumed and therefore they could not be taken into consideration for determining the appellants' clearances for eligibility under the notification. According to him captive consumption was not clearance. For the purpose, he relied on a decision of Government of India in M/s. Bharat Metal Industries, Batala Order-in-Appeal Nos. 256-57-B/81 dt. 30-4-1981/ 12-5-1981-1981 E.L.T.503 (CBE&C).

7. On behalf of the Department, Sh. V. Lakshmi Kumaran, S.D.R., submitted that captive consumption is home consumption and relied on a decision of the Tribunal in Rainbow Industries Pvt. Ltd., Baroda v.C.C.E., Baroda-1984 (16) E.L.T. 458 (Tribunal). For the decision of the present appeal, it is not necessary to enter into question whether captive consumption is clearance or whether the amendment of Rules 9 and 49 of the Central Excise Rules would be attracted to the case because this argument can be decided in the light of Explanation even in the Notification itself. Explanation-5 of the Notification reads as below : "Explanation V.-Where any specified goods (hereinafter referred to as inputs) are used for further manufacture of specified goods (hereinafter referred to as finished goods) within the factory of production of inputs and where such inputs and finished goods all under the same item of the said First Schedule to the said Act, the clearances of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this notification." 8. From the Explanation, it would be seen that clearances of inputs is not to be taken into account for the purpose of calculating the aggregate value of clearances only when the inputs and finished products fall under the same item of the First Schedule to the Act. In the instant case, whereas Electric Motors fall under Tariff Item No.30, Power Driven Pumps fall under Tariff Item 30A. Having regard to this explanation and the intention of the notification regarding exclusion in the case of captive consumption being clear, Electric Motors captively consumed as inputs in the manufacture of power driven pumps cannot be excluded for determining the appellants' clearances.

Mr. Mehta then next argued that in monoblock pumps, there is no motor, therefore, it cannot be said that the appellants in clearing Electric Motors for captive consumption for using monoblock pumps cleared any motor. Sh. Mehta explained that in the manufacture of Monoblock pumps rotors and stators are used and motor as such does not come into existence. The appellants' admission in the documents that they had used Electric Motors for making mono-block pumps was clearly an error.

They had only used rotors and stators. Sh. Lakshmi Kumaran for the respondent agreed that in monoblock pumps, there is no electric motor as such but submitted that rotors and stators are parts of Electric Motors and Tariff Item No. 30 of the C.E.T. is wide in terms covering Electric Motors all sorts and parts thereof. In view of the above arguments of SDR, even if in the monoblock pumps there be no electric motor and it be found that rotors and stators are parts of electric motors then also Sh. Mehta's argument that clearance amounting to Rs. 6,51,138.50 being the value of clearance of electric motors for captive consumption for making monoblock pumps should be excluded, would fail.

It is now to be seen whether rotors and stators used by the appellants for making monoblock pumps are parts of electric motors.

9. Shri Mehta contended that rotors and stators used by the appellants had been given special shape and size and could not at all be used for making electric motors. They could only be treated as component parts of monoblock pumps and should therefore be excluded in determining the value of clearances. For the purpose he relied on a decision of Delhi High Court in Century Spinning & Manufacturing Co. Ltd. v. Union of India -1980 E.L.T. 721 (Delhi). He also relied on a certificate dated 5-1-1982 by Shri B.G. Desai of the Devki R & D Engineering. This certificate in the end says that "Rotors of motors for monoblock pumps are specially constructed components fitting the pump assembly. They cannot be used to assemble a general purpose independent motor". Shri V. Lakshmi Kumaran distinguished Delhi High Court decision which was based on an admission of the parties that Pot Motors are not electric motors and could not be used for any purpose except as component parts of spinning machines. He submitted that the certificate filed by the appellants was not conclusive and did not rule out the use of rotors and stators for electric motors which may not be a general purpose independent motor. We find that the Delhi High Court decision relied on by Sh. Mehta which was based on an admission is not applicable in the facts of the present case, The certificate filed by the appellants does not rule out the use of rotors and stators for manufacturing an electric motor which may not be a general purpose independent motor, it could be in any other electric motor. Explanation-II of Tariff Item 30 excludes only motors specially designed for use in Gramophone and record players and its parts. It is not shown that rotors and stators could be used for assembling these motors. Tariff Item 30, as already pointed out covers Electric Motor, all sorts and parts thereof. Even if in assembly of monoblock pumps electric motor may not come into existence, there can be no doubt that rotors and stators used by the appellants could go to make an electric motor and would therefore be covered by Tariff Item 30.

10. It is next argued that the appellants had given clearance value of Rs. 6,51,138.50 for electric motors for making monoblock pumps where only stators and rotors had been used. The value of rotors and stators would be far less than this amount. For this the appellants themselves are to blame. Even before the Tribunal they did not bring out the figures as to what would be the value of rotors and stators used. We are told that only minimal processing is necessary with rotors and stators in assembling monoblock pump. The appellants admit clearances of Rs. 13,43,443.55. Even if only a sum of Rs. 1,57,000/- out of Rs. 6,51,138.50 which the appellants themselves admit to be clearance value of electric motors and which they now claim to be rotors and stators, be taken to be the value of rotors and stators, the appellants would exceed the clearance limit of Rs. 15 lakhs as stipulated by the notification. We find accordingly.

11. Shri Lakshmi Kumaran, learned S.D.R. during arguments submitted that manufacturers using rotors and stators for captive consumption had been given certain concession under Notification No. 95/83-C.E,, dated 1-3-1983 and accepting the appellants' interpretation would cause havoc in Industry and result in denial of benefit of concession under the notification to others. He also pointed out that the Collector had given concession under the notification to the appellants in the matter of set-off in respect of stampings. As this argument is not necessary for decision of the appeal we do not consider it necessary to deal with the same.

12. As a result of aforesaid discussion we find that the appellants had exceeded the clearance limit stipulated by Notification No. 80/80-C.E., dated 19-5-1980. The appeal, therefore, fails and is dismissed. The order passed by the Collector of Central Excise (Appeal), Bombay is upheld.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //