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Indian Tool Manufacturers Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1734DTri(Delhi)
AppellantIndian Tool Manufacturers Ltd.
RespondentCollector of Central Excise
Excerpt:
.....item no. 62 of the 1st schedule to the central excises and salt act (cet for short) relating to "tool tips". this was on 6-11-1973.4. by a letter dated :-10-1977 the appellants sought exemption of the goods from duty on the ground that carbide blanks were only intermediate goods used in the manufacture of carbide throwaway inserts; that they were not sold in the market as such and were not capable of being used unless they were converted into inserts. after hearing the appellants, the assistant collector held that the carbide blanks had been correctly classified under item 62-cet on the ground that the raw material (tungsten powder) and the manufacturing process was one and the same for both carbide blanks and tool tips, that carbide blanks could be used as tool tips and that the fact.....
Judgment:
1. The 2 separate Orders-in-Original came to be passed by the Assistant Collector of Central Excise, Nasik, one in respect of "Carbide Blank and the other in respect of "Carbide Plugs and Rods" manufactured by the appellants. The Appellate Collector of Central Excise, Bombay, disposed of the 2 appeals filed by the appellants against the said 2 orders by a consolidatad order bearing Nos. 1278/79 and 1279/79 dated 25-9-19/9. Aggrieved with the orders passed by the Appellate Collector the appellants preferred a Revision Application to the Central Government which, in terms of section 35-P of the Central Excises and Salt Act, 1944, has been transferred to this Tribunal for disposal as if it were an appeal presented before it.

2. Since there are 2 causes of action, the appellants were advised to file 2 separate appeals, which they have done.

3. The present part of the order deals with only the matter arising out of the Order-in-Original F. No, V/62/(17)617/76/TA dated 24-4-1978 passed by the Assistant Collector of Central Excise, Nasik and the Order-in-Appeal by the Appellate Collector of Central Excise, Bombay, in relation thereto. The subject dealt with in these proceedings was "Carbide Blanks" manufactured by the appellants out of Tungsten powder.

The blanks were used captively in the manufacture of Carbide Throwaway Inserts. They were classified by the Central Excise authorities under Item No. 62 of the 1st Schedule to the Central Excises and Salt Act (CET for short) relating to "Tool Tips". This was on 6-11-1973.

4. By a letter dated :-10-1977 the appellants sought exemption of the goods from duty on the ground that Carbide blanks were only intermediate goods used in the manufacture of Carbide Throwaway Inserts; that they were not sold in the market as such and were not capable of being used unless they were converted into Inserts. After hearing the appellants, the Assistant Collector held that the Carbide blanks had been correctly classified under Item 62-CET on the ground that the raw material (Tungsten Powder) and the manufacturing process was one and the same for both Carbide blanks and Tool Tips, that Carbide blanks could be used as Tool Tips and that the fact that they were not sold in the market and that they were captively consumed could not alter their dutiability under Item 62-CET.5. Aggrieved with this order, the appellants filed an appeal before the Appellate Collector who rejected the contention that the Carbide blanks were only intermediate goods, that they were not marketed and that they could not be used as Tool Tips. He held that the blanks had assumed an identifiable shape and a particular use. The use might be for captive consumption or for sale. In this view of the matter he rejected the appeal, 6. It is against this order that the appellants filed a Revision Application to the Central Government which, as earlier pointed out, stands transferred to this Tribunal for disposal.

7. In the Memorandum of Revision Application (hereinafter referred to as appeal) it is contended that the Carbide blanks are not finished product, that they cannot be used unless they are subjected to further process of manufacture unlike Carbide Throwaway Inserts which are finished product and could be straightway used. However, the Central Excise authorities had misconstrued the Carbide blanks to be Sintered Carbide Tool Tips and hence classified them under Item 62-CET. While not denying that goods used for captive consumption were liable to pay duty unless exempted, the appellants contended that the subjected Sintered blanks were not goods since they were not a completed or finished product. The Department had not shown that they were marketable and, therefore, they were goods.

8. Shri Kamal Parsuram Puria, Counsel for the appellants reiterated the submissions contained in the Memorandum of Appeal. Shri K.D. Tayal, SDR, represented the Respondent.

9. We have carefully considered the submissions contained in the appeal memorandum and those adduced at the time of hearing. It is seen from the Assistant Collector's orders that the Carbide blanks manufactured by me appellants were classified by the Excise authorities as early as 6-11-1973 under Item 62-CET. It appears that it was only in 1977 that the appellants seriously agitated the matter of classification and pressed their claim that the blanks represented an intermediate stage in the manufacture of Throwaway Inserts which were the finished product falling under Item 62-CET and, therefore, the subject blanks were not excisable. However, they had vigorously contended before the Appellate Collector that the blanks were not known as Tool Tips in the trade and would not be accepted against a contract for the supply of Tool Tips.

The Department have not produced any evidence to rebut this contention and show that the Carbide blanks are known to the market as Tool Tips and sold as such. The basis on which the Assistant Collector has considered the blanks as Tool Tips, as seen from his order, is that in the manufacture of the article, Tungsten powder is the common raw material as in the case of Carbide tool tips; the manufacturing process is the same and that "carbide blanks also appear like tool tips and can be used as tool tips". These reasons do not, in our view, add upto a sound basis for the classification of blanks as tool tips in the absence of any evidence to controvert the appellant's contention. When the Department wishes to bring a certain article under a particular tariff entry for duty purposes, the onus of showing that the goods fall for classification under that item is on the Department and this, to our mind, has not been discharged.

10. On the basis of the material available before us we have to come to the conclusion that the subject goods were not "Tool Tips" falling under Item '2 CET. In that event they would fall for classification under the residuary Item No. 68-C-ET with effect from the date of insertion of that Item in the Central Excise Tariff Schedule. As a result, we set aside the order of the Appellate Collector of Central Excise, allow the appeal and direct that the consequential relief be granted to the appellants within 2 months from the date of communication of this order.

11. Insofar as the subject matter of the order of the Assistant Collector No, V-51A(J7)570/77/TA/18039 dated 12-5-1978, is concerned, we find that, though the Appellate Collector has referred to the said order in the preamble to his order, he has not dealt with the appellants' contentions to the effect that Carbide plugs and Rods manufactured by them fall for classification under Item 68-CET and not Item 62-CET as held by the Assistant Collector. It is also relevant to note that the Counsel for the appellants, in the course of the hearing, made a grievance of the fact that though the Show Cause Notice dated 6-8-1977 had asked the appellants to show cause why the said goods should not be classified under Item 51-A-CET and why their claim for classification under Item No. 68-CET should not be rejected, the order passed by the Assistant Collector proceeded to classify the goods under Item 62-CET. Prima facie, the appellants' grievance seems to be justified., In any event, as we have observed, the Appellate Collector's order does not deal with the appellants' contentions in relation to the classification of Carbide plugs and Rods. We direct that the Appellate Collector should deal with the appellants' contentions afresh and pass appropriate orders after giving an opportunity to the appellants of being heard.

12. The appeal is disposed of in the light of the observations and directions given above.


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