HINDUSTAN MOTORS LTD Vs. COLLECTOR OF CENTRAL EXCISE
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
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K.S. Sankararaman, Member (T) -
(1.) THE Stay Application filed by M/s. Hindustan Motors Ltd. seeks stay of recovery of the amount which has fallen due from them as a result of the order-in-appeal dated 29-1-1990 passed by the Collector of Central Excise (Appeals), Calcutta and waiver of the predeposit of the same as a condition for the disposal of their appeal filed against it. By the impugned order, the Collector (Appeals) partially upheld the Order-in-Original dated 6-8-1989 passed by the Assistant Collector of Central Excise, Rishra Division holding that modvat credit was not admissible to them in respect of Resins in the manufacture of sand moulds in the course of manufacture of parts of motor vehicles and internal combustion engines by the casting process.
(2.) Shri S.K. Bagaria, learned Counsel for the applicants argued their case when the Stay Petition was called. He stated that the so-called sand moulds come into existence at an intermediate stage in the course of manufacture of castings. These are made of sand with the help of the resins which are used to bind the sand to give it some shape which is retained for some time for the duration of the casting process. He submitted a set of photographs to explain the process involved and the use of the sand mould. Actually it is not sand mould as moulds are understood, Shri Bagaria pointed out. Sand, mixed with the resins to give it a little cohesiveness to stick together for some time was given a temporary shape inside the mould box. When the molten metal is poured into the mould box, it takes the shape of the hollow space in the mould box, leaving the space occupied by the shaped sand. The shaped sand is not an independent mould by itself but is used in the mould box to fill in the hollow space of the castings. This shaped sand has been taken as the mould. It is not of a durable nature. On cooling it is knocked off. It is not capable of storage or removal and cannot be and is not marketed. Its temporary shape is lost once the sand is utilised in making the casting. As a result of the hot metal coming into contact with it it gets burnt. After cooling the mould box is removed, the sand is knocked off and the casting is recovered. It is not like a mould box or a mould made of a durable material like metal which are marketable and are goods. The fact that the "sand moulds" have been covered by an exemption from duty does not confer on them the status of goods. They are formed in Situ, during the casting process and is broken up after one operation. They are not equipment/apparatus/appliance as held by the Assistant Collector in his Order-in-Original. The Collector (Appeals) had in an earlier appeal taken a contrary view which is in support of their contention. That was in an appeal filed by M/s. Balaji Steel Castings. A copy of that order has been submitted by them.
Shri Bagaria fairly conceded that the South and West Regional Benches of the Tribunal had taken decisions adverse to the stand being taken by him. These decisions are in the case of -
(1) Mukand Iron & Steel Works v. Collector of Central Excise, Bombay-III, reported in 1990 (48) E.L.T. 552 (Tri.)
(2) Shivaji Works Ltd. v. Collector of Central Excise, reported in 1990 (50) E.L.T. 40 (Tribunal) (WRB)
(3) Mysore Kirloskar Ltd. v. Collector of Central Excise, reported in 1990 (50) E.L.T. 175 (Tribunal) (SRB).
(3.) SHRI Bagaria stated that he would submit with respect, that these decisions may be departed from because some of the pleas that he has made in the present case were neither advanced nor considered by the learned Benches. Thus, in the Shivaji Works Ltd. case it was not at all considered what would be the legal position if the resins are treated as consumables or what effect it would have on the matter in issue if they are treated as parts. The Mysore Kirloskar judgment of the South Regional Bench had fol lowed the rationale in their earlier decision in Andhra Pradesh Paper Mills v. Collector of Central Excise [1990 (50) E.L.T. 252] that as machinery is excluded from modvat benefit, as a corollary, the parts which are used in these machines are also not eligible. Following this rationale, they held that the inputs used in the manufacture of sand moulds which are by themselves in the nature of tools or apparatus have to be held to be used in the manufacture of sand mould and not in or in relation to the manufacture of the castings. SHRI Bagaria submitted that this would not be a correct application of Rule 57A and the explanation thereunder. What were excluded are appliance, equipment, apparatus etc. specified therein and not any other things not so specified. The South Bench decision is opposed to the ratio laid down by the same Bench in 1990 (48) E.L.T. 283. The resins are not appliances etc. as above and to say that the resins are used only for the manufacture of sand moulds and not for the manufacture of castings would not be correct. No manufacture of sand moulds is involved as they are not goods. Manufacture can be only of goods. As the sand moulds are not goods as they do not satisfy the criteria of removability or marketability, they are covered by the judgment of the Supreme Court on what is manufacture as laid down by them in the Bhor Industries case and Ambalal Sarabhai case - 1989 (40) E.L.T. 280 and 1989 (43) E.L.T. 214 respectively. The resins are thus not used in the manufacture of any goods, intermediate products or otherwise but used in the manufacturing process of castings themselves. They are thus covered by the requirement of Rule 57A. Without their use, castings cannot be manufactured. He relied upon the decision of the Supreme Court regarding the scope of the expression "used in the manufacture of rendered in the following cases:
(1) J.K. Cotton Spinning & Weaving Mills v. Sales Tax Officer - 1965 (16) STC 563
(2) Collector of Central Excise v. Eastend Paper - 1989 (43) E.L.T. 201 SC
(3) Collector of Central Excise v. Ballarpur Industries Limited - 1989 (43) E.L.T. 804 SC;
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