Decided on December 30,1991



K.Sankararaman, - (1.) THE appeal by the Collector of Central Excise, Calcutta-II is directed against the Order-in-Appeal dated 18-3-1991 passed by the Collector of Central Excise (Appeals), Calcutta allowing the appeal filed with him by M/s Andaman Timber Industries who are the respondents in the present proceedings and setting aside the Order-in-Original dated 9-8-1990 passed by the Assistant Collector of Central Excise, Howrah (West) Division. THE latter had held that the respondents (herein) were not eligible for modvat credit in respect of Aloxide Paper used by them in the manufacture of plywood, the same being tools and appliances which belong to the category of goods which are specifically excluded from the scope of the term "input" in view of the Explanation Clause under Rule 57A. THE Collector (Appeals) allowed the appeal going by the earlier decision in a similar matter relating to M/s. Sarda Plywood Industries of Jorhat Division of Shillong Collectorate [Order-in-Appeal No. 80/SH/89, dated 22-12-1989].
(2.) Shri M. N. Biswas, learned Senior Departmental Representative appeared for the appellant Collector during the hearing of the appeal. He submitted that the non-appealing against the earlier order does not debar the department from agitating the issue on merits in subsequent cases. There is no estoppel against the statute. On examination of the facts in the present case, it has been found fit for appeal. Coming to the merits of the case, Shri Biswas pointed out that the paper in question serves the purpose of tools, being used for surface working of the plywood. Though admittedly it is used in relation to the manufacture of plywood it is used as appliance/tool which belong to the excluded category of inputs. It stands on the same footing as drill bits or polishing stone which work on the surface of a material. He, therefore, pleaded that the appeal be allowed and the Order-in-Appeal set aside, restoring the Order-in-Original of the Assistant Collector.
(3.) SHRI B.N. Chattopadhyay, learned Consultant appeared for the respondents. He pointed out that in the show cause notice, Aloxide Paper/coated which is the item in question had been referred to as classifiable under sub-heading 6802.00. They cannot be said to be raw material or component parts of plywood. There is no allegation that it is used as tools or appliances. This ground is taken in the appeal only and not in the original show-cause notice. In the ground of appeal there is reference to grinding wheels. The issue does not concern grinding wheels at all. The goods in question are referred to as tools or appliances. The appellant is not sure whether it is one or the other. It has to be only one of the two. There is lot of confusion in the appeal. To be excluded from the benefit of modvat the goods in question should not be machinery, machines, tools, appliance etc. which are listed in the Explanation to Rule 57A. The goods in question are not any of these items and modvat cannot be denied at all. Abrasive paper which is Aloxide Paper is by no stretch of imagination a tool. He then referred to Chapter Note (e) under Chapter 68 in terms of which that Chapter does not cover tools or parts of tools of Chapter 82. This will rule out the question of the Aloxide Paper being tools. Even the lower authority had only stated that the paper in question is used as tool and not that it is tool as such. Use as a tool is not the same as being a tool. What are excluded from the scheme of Rule 57A are items like machines, machinery, plant, equipment, apparatus, tools or appliances which are durable and permanent and not consumable items like the abrasive paper. In this, he relied upon a recent decision of this Bench, Order No. 722 & 723/Cal/1991, dated 31-10-1991 in Collector of Central Excise, Bhubaneswar v. Straw Products Limited. This has not yet been reported [since reported in 1992 (59) E.L.T. 572 (Tri.)]. He also relied upon the decisions in the following cases :- (1) Vikrant Tyres v. Collector of Central Excise, Bangalore -1991 (34) ECR 131 (CEGAT). (2) Collector of Central Excise, Bhubaneswar v. Titagarh Paper Mills -1985 (21) E.L.T. 901 (Tribunal). (3) Collector of Central Excise, Indore v. Gwalior Rayon & Silk Mills -1988 (35) E.L.T. 227 (Tribunal). (4) Collector of Central Excise v. Ballarpur Industries - 1989 (43) E.L.T. 804 (S.C.). (5) Collector of Central Excise v. Hindustan Development Corporation -1990 (47) E.L.T. 376 (Tribunal). (6) Mukand Iron and Steel Works Ltd. v. Collector of Central Excise -1990 (48) E.L.T. 552 (Tribunal). He, therefore, pleaded that the appeal be dismissed.;

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