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A.C.C. Babcock Limited Vs. Collector of C. Ex. - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1989)(44)ELT369TriDel
AppellantA.C.C. Babcock Limited
RespondentCollector of C. Ex.
Excerpt:
.....fall under t.1.25 of the c.e.t. and they are totally exempt from the central excise duty. such iron rolls are supplied to re-rollers to use such castings in their factories after completing certain further processes as per design at their end. these castings in the appellants' factory undergo only partial machining to remove the surface defects on the main body of the rolls. no doubt fine machining is also done on certain portion of the castings, namely; the collar portions which are about 3-1/2" on either side of the rolls but this surface machining and fine machining of the collar do not covert the casting to any different form, nor does it transfrom it into a different identifiable product such as, machine parts etc.2. sh. m. mookherjee, advocate, on behalf of the appellants,.....
Judgment:
1. This is an appeal by M/s. A.C.C. Babcock Ltd., Shahabad, Gulbarga District, Karnataka against the classification of the goods namely, 'Cast iron rolls' manufactured by them under Tariff Item, 68 of the Central Excise Tariff. The appellants have stated that these 'Rough castings' fall under T.1.25 of the C.E.T. and they are totally exempt from the Central Excise duty. Such iron rolls are supplied to re-rollers to use such castings in their factories after completing certain further processes as per design at their end. These castings in the appellants' factory undergo only partial machining to remove the surface defects on the main body of the rolls. No doubt fine machining is also done on certain portion of the castings, namely; the collar portions which are about 3-1/2" on either side of the rolls but this surface machining and fine machining of the collar do not covert the casting to any different form, nor does it transfrom it into a different identifiable product such as, machine parts etc.

2. Sh. M. Mookherjee, Advocate, on behalf of the appellants, further submitted that these iron rolls were made according to the specifications and drawings given by their customers and are invoiced as 'cast iron roll castings'. The appellants have produced certificates from some of their Customers like M/s. Loharu Steel Industries Ltd., Bangalore and M/s. Shyam Steel Rolling Mills, Bangalore. These certificates state that the 'cast iron roll castings' supplied by the appellants cannot be used as machine parts directly and are subjected to several processes, such as, fine machining groove cutting etc.

before these could be used as machine parts. The learned Advocate for the appellants relied upon the following decisions:Tata Iron & Steel Co. v. Collector of Central Excise, Calcutta -1983 (13) E.L.T. 1113 (CEGAT); ,Tata Engineering & Locomotive Co. v. Collector of Customs, Bombay (iii) Tata Yodogwa Ltd. v. Assistant Collector of Central Excise, Jamshedpur and Ors. - 1983 (12) E.L.T. 17 (Pat.) These cases have inter alia decided that partial machining of castings could be ignored for the purpose of assessment under item 25 of the C.E.T. Further if these castings were subjected to fine machining they could be considered as having been made into identifiable machine parts.

3. Sh. V. Luxmi Kumaran, S.D.R. could not controvert that the main body of the rolls has undergone only some processes to remove certain defects like roughness, cracks, damages etc. He further could not dispute that the fine machining had been done only to the collars of the rolls and that these rolls had to undergo further fine machining and grooving before they could be used as parts of the machines. He however stressed that the goods should be assessed under T.I.68 of the C.E.T. and cited a case reported in 1977(1) ELT J-26 (Supreme Court) in the case of Union of India and Ors. v. Slate of Mysore, wherein 'Mamties, pick axes, sledge hammers, shovels & ploughs made out of pre-excise stocks of iron & steel products which had not been born any excise duty at all could not be assessed to duty under T.I.26AA of C.E.T.He drew attention of the Bench about difference in the wording under T.I. 25 and 26AA of the C.E.T. and stressed that the words iron castings in any other shape or size should be in the form of crude iron to entitle then classification under T.1.25. He distinguished the wording in Item 26AA sub-item(v). All other castings, not otherwise specified i.e. without any qualification. He further added that to classify the goods under T.1.68, it was not necessary for the Department to prove further as the item in question assumed the characteristic of identifiable machine parts after fine machining.

All that was necessary for the Department to say was to show that the item does not remain cast iron in crude form to continue under item 25 of the C.E.T. as is now apparent from the photographs produced by the appellants/Advocate and is assessable under T.I.68 of C.E.T.4. The Advocate for the appellants produced three different photographs of the iron castings which showed surface machine, and fine machining only at the collars ends in the appellants factory and at the customers end.

5. We have carefully considered the arguments advanced by the parties and decisions cited in the case. As for Sh. Luxmi K. Kumaran's reliance on the Supreme Court's decision in the case of Union of India and Ors.

v. State of Mysore (supra); it is sufficient to say that in this case, there is no evidence that how the goods are known in the market, therefore, this decision would not be of any help to the Department. On the other hand, it is noticed that three decisions which have been cited by Sh. Mookherjee, learned counsel for the appellants in support of his arguments, are squarely applicable in the present case. The machining done at the appellants' factory to the iron castings is negligible in nature except in the collar portion. The extent of machining done at the middle portion which was brought to our notice by the learned Departmental Representative is not of much importance. We think this was only done to reduce surface defects on the castings. We also agree with Sh. Mookherjee that this machining does not have the effect of bringing in any new product into existence, which is known in the market as such. Hence it would not be correct to say that the machining done has resulted in the manufacture of a new product.

In view of the foreging discussion, we hold that the appellants goods, known as cast iron rolls, are correctly classifiable under Tariff Item 25 of the C.E.T. and not under T.I.68 ibid as done by the Department.

The appeal is thus allowed.


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