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Mould and Dies Private Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)LC66Tri(Delhi)
AppellantMould and Dies Private Ltd.
RespondentCollector of Central Excise
Excerpt:
.....collector of central excise, bombay by his order dated 30-12-1979 held that the goods after teeth-cutting operation (that is, one of the items of manufacturing processes) could not be held to be excisable. the products after teeth- cutting operation were not finished products to attract duty. he, therefore, withdrew the show-cause-cmw-demand notice issued by the range superintendent. the collector of central excise, bombay reviewed the order and on 4-2-1984, he set aside the order of the assistant collector and ordered payment of the central excise duty amounting to rs. 1,71,242.51 p. he held that the process of teeth-cutting, brought into existence a new item which was altogether different in shape and size as against the raw materials and the process of manufacture was complete.....
Judgment:
1. The Assistant Collector of Central Excise, Bombay by his order dated 30-12-1979 held that the goods after teeth-cutting operation (that is, one of the items of manufacturing processes) could not be held to be excisable. The products after teeth- cutting operation were not finished products to attract duty. He, therefore, withdrew the show-cause-cMw-demand notice issued by the Range Superintendent. The Collector of Central Excise, Bombay reviewed the order and on 4-2-1984, he set aside the order of the Assistant Collector and ordered payment of the Central Excise duty amounting to Rs. 1,71,242.51 P. He held that the process of teeth-cutting, brought into existence a new item which was altogether different in shape and size as against the raw materials and the process of manufacture was complete under Section 2(f) of the Central Excises and Salt Act, 1944.

2. Aggrieved by the decision, the Appellants had preferred this appeal.

On behalf of the Appellants Mr. Gopal Prasad, Consultant, argued that the Appellants received raw material, namely, machined "Blanks", for crude teeth-cutting. The Appellants purchase steel forgings and sell them as such without carrying out any activity. At times the Appellants also purchased steel forgings and round bars and sold the goods after teeth-cutting for manufacture of gears or pinion shafts. The Appellants have also set out the nature of the processes carried out by them in the grounds of Appeal. It is seen therefrom that the steel bars, forgings, castings are first machined and thereafter the process of teeth-cutting in crude form is carried out. The Appellants contend that the teeth grinding and lapping is carried out to remove dimensional variations on gear teeth surfaces. According to the Appellants, these products could not be sold in open market without carrying out the processes of broaching, slotting, heat treatment, grinding of teeth, boring, etc. The Learned' Consultant also set out a plea of time-bar.

According to him, the orders were passed on 30-12-1979 and the show cause notice for review which was issued on 13-3-1981 was barred by time. He relied on the ruling of the Tribunal reported in 1984 (16) E.L.T. 177 (Bombay) [Corn Products Co. (India) Ltd: and Anr. v. Union of India and Anr.]. He also cited the decision before the 1984 (17) E.L.T. 175 {Jamshedpur Engineering Machines Manufacturing Co., Jamshedpur v, Collector of Central Excise, Patna). He stated that it was for the department to establish by evidence that the castings were ready to use machine parts. Even acceding that there was a manufacture, according to the Learned Consultant, it was only a mere job work and the excise duty demanded was not justified. Mr. K.V. Kunhikrishnan, JDR, appearing for the department, stated that once the teeth-cutting was done, a major part of the processes was complete and an identifiable machine part had come into existence. According to him, the goods manufactured by the' Appellants attracted duty. There was no question of time-bar as the order comes into force only from the date of communication.

3. We have carefully considered the contentions raised by both the parties.

4. On the present facts, we are of opinion that the Appellants could not be held to have manufactured goods attracting duty. The Appellants are carrying out the process of teeth-cutting in the raw materials which are received 'blank' from the customers. After the teeth-cutting in the crude form is carried out, further processes such as heating, grinding, lapping, etc., have to be carried out in order to bring into existence an identifiable machine part. There is no evidence on the side of the department to hold that the products, as processed by the Appellants, could be sold in the open market and used as an identifiable machine part, without carrying out further processes. The crude form in which the cutting is done without special machining or heat treatment, will not render the goods fit for use as machine part.

It is also seen that the Appellants are only carrying out job work as desired by the customer on the raw materials supplied by them. The parts processed by them cannot be held to be parts of a machinery. The Appellants have contended before the Collector of Central Excise that the processes of cutting teeth is not a process of manufacture. The Appellate Collector has come to the conclusion that the process of teeth- cutting brought into existence a new item different in shape and size as against the raw material. But this observation overlooks the fact that what was produced was not an identifiable machine part. The Collector has also held that the goods are not capable of being bought and sold because the Appellants carry out merely job work. In the light of the submission made by the Learned Consultant and in view of the contentions raised by Appellants, we are of the view that the goods machined 'Blank' are not machine parts ready to use in order to attract duty.Tata Iron & Steel Co. Ltd., Jamshedpur v. Collector of Customs, Calcutta, reported in 1983 E L.T. 1113, held that forgings remain forgings even after machining. In the case of Tata Engineering & Locomotive Co. Ltd., Bombay v. Collector of Customs, Bombay, reported in 1983 E.L.T. 1122 the Tribunal held that iron castings after machining continued to remain under Item 25 and not Item 68. The Five Member Special Bench in Tata Engineering & Locomotive Co. (P) Ltd., Bombay v. Collector of Customs, Bombay, [Orders No. 449-455/84 dated 31-8-84=1984 (18) E.L.T.65] again upheld these two decisions. These decisions would further reinforce the view taken by us.

6. We also notice that the Order of the Assistant Collector is dated 30-12-1979. The date of issue of the Order is shown as 8th May, 1980.

The review show cause notice was issued on 13-3-1981. The Learned Consultant argued that the show cause notice was barred by time. Though the date of order is mentioned as 30-12-1979, since it was issued only on 8-5-1980, the period of limitation has to be reckoned from that date. The show cause notice is, therefore, not barred by time.

7. However, in the view taken by us on merits, the impugned order is not sustainable. The order is set aside and the Appeal is allowed.


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