1. The petitioner is a public limited company manufacturing electrical goods like high tension insulators, lightning arresters etc. with technical collaboration with M/s. Westinghouse Electric International Co., U.S.A. The petitioner is also licensed under the Central Excise Act for the manufacture of China ware, and porcelain ware which are excisable under the Central Excise Tariff item 23-B of the First Schedule to the Central Excise Act and the rules framed thereunder. The lightning arresters manufactured by the petitioner have, as one of their components, a shell made of porcelain. On the ground , that the lightning arresters which are articles manufactured by the petitioner-company contain a shell made of porcelain as their component, the Central Excise authorities proposed to levy Central Excise Duty on the porcelain portion of the integral unit, namely, the lightning arresters. This was objected to by the petitioner. However, the excise authorities levied excise duty treating the lightning arresters which are the manufactured products as an item of porcelain ware coming under Item 23B of the First Schedule to the Central Excise Act. The petitioner company filed a revision petition to the Central Government against the said imposition. The Central Government, however, held that the levy of duty on the shells which form an integral unit in the manufactured articles, i.e. Lightning arresters, is in order.
2. The petitioner has challenged the validity of the said levy on the ground that the lightning arresters which are manufactured by the petitioner will not come under the head 'porcelain ware' found in Tariff Item 23B of the First Schedule. It is contended by the learned counsel for the petitioner that the company is not manufacturing shells as a saleable commodity, but that they are manufactured only for use as a component in the manufacture of lightning arresters and that therefore, the porcelain content of the lightning arresters cannot be brought to charge under Tariff Item 23B. It is also contended by the learned counsel that even assuming that the shell content of the lightning arresters manufactured by them is to be treated as porcelain ware. Since its value is less then 50 per cent of the manufactured product, it is not liable to excise duty at all under the clarification issued by the Central Government. In respect of the first submission that unless the shells which they are using as a component in the manufacture of lightning arresters are sold as a marketable commodity the same cannot be brought under Tariff Item 23B, reference is made to the decision of a Division Bench of this court in English Electric Co. v. Superintendent Central Excise - : 1979(4)ELT36(Mad) . In that case, the English Electric Co. manufactured high rupturing capacity cartridge fuselinks using porcelain shells as one of their components. The company was levied duty on the porcelain content of the manufactured product when the manufactured product was cleared. The levy was challenged before this court and the Division Bench held that the fuselinks manufactured by the said com-p.any cannot be treated as porcelain ware referred to in Tariff Item 23B of the First Schedule to the Central Excises and Salt Act, as the manufactured article is not porcelain ware as such and the fuselinks cannot be liable to excise duty under Item 23B. Except that the articles manufactured in that case and this case are different, the principle laid down in that case is applicable to this case as well as in the case of fuselinks manufactured by the company in that case, the petitioner company is manufacturing lightning arresters using as one of their components porcelain shells. When the company sells the lightning arresters as manufactured by it, it cannot be said to be selling porcelain ware. It is not the case of the department that the petitioner company is manufacturing any porcelain ware apart from the shells which it uses as component parts in the manufacture of lightning arresters. In one or two instances the petitioner company has manufactured fuses at the request of other companies according to the design and specifications given by them. This will not make the petitioner company a dealer or a manufacturer of porcelam snells as such. Therefore, the levy of excise duty on the porcelain content of the lightning arresters manufactured by the petitioner cannot be held valid. In this view, it is unnecessary to deal with the second contention. The writ petition is therefore allowed and the levy made on the petitioner company is set aside. There will be no order as to costs.