Decided on January 25,1991



- (1.) The short question which arises in all these three petitions is whether the domestic grinding mills or flour mills in question manufactured by the petitioners attract the duty under the amended entry 33C which came into force with effect from March 1, 169, by the Finance Act, No. 14 of 1969. So far as the first two petitioners are concerned at the initial stage the authorities had required them to apply for the licence for manufacture of these domestic flour mills. The authorities had asked these two petitioners to include in the price list the value of the electric motor. However, finally, the authorities took a view that this domestic grinders were non-excisable under entry 33C as they had no inbuilt electric power motor. Therefore, so far as the petitioners manufacturers were concerned, the aforesaid entry 33C was not attracted. So far as other similar products were concerned, even the Central Government had in the order, dated May 31, 1972, taken this view. The Government found the manufacturer's contention justified that such domestic appliances which had no inbuilt electric motor would not attract Central Excise Item 33C, because that entry was applicable to sophisticated types of units in which electric motor was used in the unit itself and the working parts were so specially designed and were integrated into a whole unit as to form such domestic electric appliance. In view of this decision of the Central Government, all the petitioners had not to pay any such excise duty. This view was in accordance with the relevant trade notice dated March 5,1969, No. 26 of 1969 which had been issued by the authorities notifying that Government of India had clarified that the exemption notification No. 33 of 1969, dated March 1, 1969, by which certain categories of domestic electric appliances were brought under exemption purview should be construed as referring only to such appliances as have inbuilt electric devices to operate them instantaneously when connected with the main or with the power. In other words, the appliances referred to in the notification which did not have inbuilt electrical devices did not attract the levy. All trade Associations, Chambers of Commerce and Members of R.A.O. were requested to bring this to the notice of their members-manufacturers. Thereafter the Central Government has now sought to levy duty on the very same article by taking a different view as per the order which is challenged by the second petitioner, dated September 17, 1973. In that order they have pointed out that according to the size, capacity, output and the small horse power of the motor required for this appliance, it was clearly a domestic appliance and it was advertised as such domestic appliances. It was further pointed out that the design in the unit was such that the motor was specially fitted to the unit, and therefore, such grinders were liable to be assessed as domestic electrical appliances under Item 33C of the tariff Schedule. Accordingly even the first petitioner in whose case the collectorate had taken a final decision that these domestic flour mills were non-excisable under entry 33C were also required to pay duty under this item. The same is the case of the third petitioners who are fresh manufacturers. Therefore, all these three petitioners have challenged the aforesaid levy under Item 33C.
(2.) * * * *
(3.) Therefore, this entry 33C will have to be read along with this relevant exemption notification issued under rule 8 by the Central Government as they formed one integrated scheme of levy of excise. Under Item 33C domestic electrical appliances not elsewhere specified are included and under Explanation I, these electrical appliances are those normally used in the household and similar appliances used in hotels, resturants, hostels, offices, educational institutions, hospitals, train kitchens, aircraft or ships' pantries, canteens, tailoring establishments, laundry shops and hair dressing saloons. Under Explanation II, along with the appliances, even interchangeable parts or auxiliary services accompanying an appliance to make it suitable for various purposes are to be assessed to duty along with the appliance. The exemption notification of March 1, 1969, however, exempted domestic electrical appliances falling under this item 33C other than those 20 specific which were specified in the Schedule : - The specific entry in the Schedule which is referred to in this connection in Item "3. Grinders and Mixers". In fact, all these Schedule entries make one thing clear that all these appliances are completely assembled appliances and, therefore, they would have the electric element of electrical motor fitted with them. Unless the manufacturer has manufactured a complete domestic electrical appliances, which falls under any of these 20 items of the Schedule, in view of this exempted and the entry 33C, duty under this item would not be attracted. If, therefore, the manufacturer has only produced domestic appliance which can by properly fitting into it a separate electric motor be converted into a domestic electric grinder, excise duty in question would not be attracted. The excise duty falls on the manufacture or production of the goods in question. It is not a duty on the sales, therefore, whatever may have happened at the stage of sale, as in this case, that a particular manufacturer at the time of sales is supplying to the customer this request electric unit manufactured by some other manufacturer or the customer at his place gets the electric motor fitted into this unit, it is obvious that what was manufactured by the petitioners was not an electrical appliance but what can be completed into one whole electrical appliance after purchasing a separate electric motor manufactured by another manufacturer. That is why even the further exemption notification, which was issued on the same day i.e. March 1, 1969 for giving partial exemption to the extent duty was paid on electric motor in case of such domestic electrical appliances which attracted duty, has specifically mentioned that electrical appliance must be one fitted with duty paid electric motor, rotor or starter. It is this electric element or motor or rotor or starter which gives the specific character to the goods of this description as electrical appliances. Unless electrical part is fitted into it by which the said appliance works and the rest of the assemblage would be only a domestic appliance which could not fall within the specific tariff item, of electric appliances, but would be any other kind of power driven domestic grinder. It is only when the electric motor is fitted into it that it becomes a domestic electric grinder so as to attract duty under Item 33C. Therefore, the Central Government's first order was clearly in accordance with scheme of this tariff item. That interpretation was even announced to the trade by the aforesaid trade notice.;

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