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PETITIONER: COLLECTOR OF CENTRAL EXCISE, CALCUTTA

       Vs.

RESPONDENT: JAY ENGINEERING WORKS LTD.

DATE OF JUDGMENT28/11/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1989 AIR  488            1988 SCR  Supl. (3) 998  1989 SCC  Supl.  (1) 128 JT 1988 (4)   664  1988 SCALE  (2)1529  CITATOR INFO :  E          1990 SC1893  (6)

ACT:     Central  Excises and Salt Act, 1944 Section  35L(b)  and Central Excise Tariff Item 68 and Notification No. 201/79-CE dated  4th  June,  1979 Affixation of name  plates  on  fans Whether dealer entitled to obtain proforma credit.

HEADNOTE:     The respondent is the manufacturer of electric fans. The company  brought  into its factory nameplates  under  Tariff Item  68 of the Central Excise Tariff. The  nameplates  were affixed  to the fans before marketing them.  The  respondent claimed   the  benefit  of  proforma  credit  in  terms   of Notification No. 201/79 dated 4-6-1979 which stated that all excisable goods on which duty of excise was leviable and  in the manufacture of which any goods falling under Tariff Item No. 68 being ’the input6’ had been used, were exempt from so must  of the duty of excise leviable thereon was  equivalent to  the  duty  of excise already paid  on  the  inputs.  The respondent  claimed the benefit of proforma credit  for  the goods  i.e  nameplates  on  the plea  that  the  goods  were intended to be used as inputs in the manufacture of electric fans.     The  Asstt.  Collector, Central  Excise  disallowed  the proforma  credit. The respondent preferred an appeal  before the  Collector  (Appeals) Central Excise, and the  same  was allowed  treating the said goods as inputs in terms  of  the June l979 Notifications.     The Department appealed to the Customs, Excise and  Gold (Control)  Appellate ’Tribunal which held that  even  though electric  fans  could function without  the  nameplates,  no electric,  fan  was  removed  from  the  factory  for  being marketed without the nameplates, as the Affixation   of  the nameplate  was considered an essential requirement from  the point of view of the Excise Tariff.     The  Department therefore filed an appeal under  Section 35  L(b)  of the Central Excises and Salt Act,  1944  before this Court.     Dismissing the appeal, this Court.                                                    PG NO 998

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                                                  PG NO 999     HELD:  1. The Department’s instructions requiring  every manufacturer  to affix the nameplates on the fans,  indicate that  nameplate was an essential ingredient to complete  the process  of  ’manufacture’  for  marketable  electric  fans. [1001E]     2. The Tribunal was right in arriving at the  conclusion that  the nameplate was not a piece of  decoration.  Without the  nameplates,  the electric fans as such,  could  not  be marketed; and that the dealer was entitled to the benefit of the Notification No. 201/79-CE for the purpose of  obtaining proforma credit. [1001F-G]     3.  Fans with nameplates, have certain value  which  the fans  without  the nameplates, do not have. If that  be  so, then  the  value added for the accretion  of  nameplate  was entitled   to   proforma  credit  in  terms  of   the   said notification.  It is true that an electric fan  may  perform its essential functions without affixation of the nameplate, but  that  is  not  enough.  Electric  fans  do  not  become marketable   products  without  affixation  of   nameplates. [1001G-H]

JUDGMENT:    CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1630  of 1988.     From  the  Judgment and Order dated 21.1.  I988  of  the Customs,  Excise and Gold (Control) Appellate Tribunal,  New Delhi in Appeal No . 232 1/83-BI in Order No . 18/ ]988 ’B’     G. Ramaswamy, Additional Solicitor General, K. Swami and Mrs. Sushma Suri for the Appellant.     Ravinder.  Narain.  P.K.  Ram and  D.N.  Misra  for  the Respondent.     The Judgment of the Court was delivered by     SABYASACHI  MUKHARJI, J. This is an appeal  against  the decision and order of the Customs, Excise and Gold (Control) Appellate  Tribunal  under  Section 35L(b)  of  the  Central Excises and Salt ACt, 1944 (hereinafter called ’the Act’).     The respondent is the manufacturer of electric fans, and brought into it9 factory nameplates under tariff item 68  of the  erstwhile  Central Excise Tariff. The  nameplates  were affixed  to the fans before marketing them.  The  respondent claimed   the  benefit  of  proforma  credit  in  terms   of                                                   PG NO 1000 Notification No. 201/79 dated 4th June, 1979, which was  for the  purpose of relief on the duty of excise paid  on  goods falling  under Tariff Item 68, when these goods are used  in the   manufacture  of  other  excisable  goods.   The   said notification stated in supersession of the notification  No. 178/77  of  the Central Excise, dated 18th June,  1977,  all excisable  goods on which duty of excise is leviable and  in the   manufacture of which any goods falling under Item  No. 68 (hereinafter referred to as ’the inputs’) have been used, are  exempt  from so much  of the duty  of  excise  leviable thereon as is equivalent to the duty of excise already  paid on the inputs.     It  enjoins that the procedure set out in  the  Appendix should  be  followed; and further that nothing contained  in the  said notification shall apply to the said  goods  which are  exempted from the whole of the duty of excise  leviable thereon or are chargeable to nil duty.     It  further  stipulated  that the  credit  of  the  duty allowed  in  respect of the inputs shall not  be  denied  or varied  on the ground that part of such inputs is  contained

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in  any  waste,  refuse or  by-product  arising  during  the process of manufacture of the said goods irrespective of the fact  that such waste, refuse or by product is  exempt  from the  whole  of  the duty of excise leviable  thereon  or  is chargeable  to nil rate of duty. or is not mentioned in  the declaration   referred   to  in  the   Appendix   to    this notification.  Provided, also that nothing contained in  any notification should apply to the said goods on which duty of excise is paid through bandrols.     The  Appendix  provides the procedure.  The  benefit  of proforma was claimed for the said goods on the plea that the goods   were  intended  to  be  used  (as  inputs)  in   the manufacture of electric fans. The Asstt. Collector,  Central Excise, Calcutta-XV Division, disallowed  proforma credit to the  said  goods  on  the ground  that  nameplates  ale  not essential ingredients or raw-materials in the manufacture of finished-goods  i.e.  electric  fans  and  thus  cannot   be considered  as   inputs  in terms of  the  notification  No. 20l/79 dated 4.6.1979.     The respondent preferred an appeal against the  decision before the Collector (Appeals) Central Excise, Calcutta, and the same was allowed holding, inter alia, that para 8 of the supplement  to  the manual of Departmental  instructions  on electric  fans,  has clarified the utility of   the  use  of "nameplate"  on eleectric fan and, hence, viewed  from  this                                                  PG NO 1001 angle, the said goods should be treated as ’inputs’ in terms of the notification No. 201/79 dated 4th June, 1979.     The  Collector,  therefore, set aside the order  of  the Asstt.  Collector. There was an appeal to the Tribunal.  The Tribunal  in its order noted that the short point  requiring decision  in this case was: whether the nameplate  could  be considered  as component part of the electric fan, so as  to be   eligible  for  proforma  credit  under  the   exemption notification.  The Tribunal further noted that  no  electric fan was removed from the factory for being marketed  without the  nameplate. The Tribunal also noted that even though  it could be said that electric fans could function without  the nameplates, for actual marketing of the fan, the  affixation of  the nameplate was considered as  essential  requirement. The  Tribunal  further  noted  that  it  was  an   essential requirement even from the point of view of the Excise Tariff because  the  rate of duty on different  types  of  electric fans,  depended on their variety and the sweep size  of  the fan. This information was given in the nameplate only.     It  appears  that the Department’s own  instructions  in their   Commodity  Manual  made  it  obligatory  for   every manufacturer  to affix the nameplates on the fans. In  those circumstances,  namely, for marketing the nameplates,  these were  essential. In other words, they could not be  marketed without the nameplates. The relevant particulars of the  fan for  the determination of duty, depended on the  particulars which are contained only in the nameplates. The Department’s instruction  requiring  every  manufacturer  to  affix   the nameplates  on  the  fans. indicate that  nameplate  was  an essential ingredient to complete the process of  manufacture for marketable electric fans.     It those circumstances, in our opinion, the Tribunal was right  in arriving at the conclusion that the nameplate  was not  a  piece  of  decoration  without  the  nameplate,  the electric  fans as such, could not be marketed; and that  the dealer  was entitled to the benefit of the notification  No. 20l/79-CE for the purpose of obtaining proforma credit. Fans with  nameplates, have certain value which the fans  without the  nameplates, do not have. If that be so, then the  value

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added  for  the  accretion  of  nameplate  was  entitled  to proforma  credit  in terms of the said notification.  It  is true  that  an  electric  fan  may  perform   its  essential functions  without affixation of the nameplate, but that  is not enough. Electric fans do not become marketable  products without affixation of nameplates.                                                  PG NO 1002     In  that view of the matter, it appears to us  that  the Tribunal followed the correct principles applicable in  this case. All the relevant and material factors were taken  into consideration.  The approach of the Tribunal was right.  The decision arrived at on that basis appears to be correct.      In  the  premises  the appeal fails  and  is  according dismiseed S.K.A.                                            Appeal dismissed.