Limited Vs. Collector of Central Excise  INSC 1182 (20 September 1996)
S.P. (J) Bharucha S.P. (J) Venkataswami K. (J) Bharucha.J
appeal against the judgment and order of the Customs, Excise & Gold
(Control) Appellate Tribunal, concerns the classification of "aprons"
and cots are manufactured by the appellants.
are components of textile machinery. Synthetic rubber is the raw material for
their manufacture and it is subjected to a series of processes, including
extrusion and vulcanisation. At one stage of the manufacturing process
unhardened tubes emerge. These are cut to the small lengths ordered by the
appellants' customers, and are aprons and cots.
appellants paid excise duty on aprons and cots under Tariff Item 16 A. On 29th August, 1967, an exemption notification was
issued, whose benefit the appellants claimed. Consequently, the appellants paid
no excise duty on aprons and cots until the year 1980. On 24th September, 1980, a notice was issued to the
appellants which required them to show cause why aprons and cots should not be
classified under the residuary Tariff Item 68. The appellants contention to the
contrary was accepted. On 18th January, 1982, the Collector of Central Excise issued to the appellants a notice
under Section 35 A(2) of the Central Excises and Salt Act, 1944, requiring them
to show cause why the order of the Assistant Collector should not be reviewed
and set aside. The appellants contention that aprons and cots were classified
under Item 16A was rejected and they were classified under Item 68. The
appellants carried the matter in appeal to the Tribunal. The Tribunal affirmed
the order of the Collector, but restricted the demand to the date of his show
16A reads thus :
Tariff Description Rate of Duty No.(1) (2) (3)
Rubber Products, the following namely :-
Latex foam sponge. fifty-five per cent ad- valorem
: This sub-item
includes articles made of latex foam sponge.
Plates, sheets and strips Thirty-five per cent unhardened whether vulcanised
ad-valorem or not, and whether combined with any textile materials or
Piping and tubing of unhardened Twenty-five percent vulcanised rubber. ad-valorem
4) Transmission, Conveyor or elevator belts or belting of vulcanised rubber
Item 68, so far as it is relevant, reads thus : Item Description of Goods Rate
of Duty No. 68 All other goods, not elsewhere One per cent specified,
manufactured in a factory but excluding The relevant portion of the said
Exemption Notification reads thus:
exercise of the powers conferred by sub-rule (1) of rule 8 of the Central
Excise Rules, 1944, the Central Government hereby exempts piping and tubing of
unhardened vulcanised rubber, falling under sub-item (30 of Item No. 16A and
specified in column 92) of the Table below from the whole of the duty of excise
leviable thereon. :- TABLE Serial Description No.3. Piping and tubing designed
to be or converted in the factory of its production into component parts of
machinery articles (including typewriters) provided such component parts do not
perform the function of conveying air, gas or liquid.
A.M. Setalvad, learned counsel for the appellants, submitted that aprons and
cots were classifiable under Item 16A because they were "piping and tubing
of unhardened vulcanised rubber". Being specifically covered under this
item, the residuary Item 68 had no application.
was placed upon the judgment of this Court in Bharat Forge & Press
Industries (P) Ltd. vs. Collector of Central Excise, 1990 (45) E.L.T. 525,
where the appellants made pipe fittings such as elbows and bends by cutting
steel pipes and tubes into different sizes, giving them shape and turning them
into pipe fittings by heating in a furnace, hammering and pressing. They
claimed that these pipe fittings fell within Item 26AA(iv) of the Tariff, which
read as follows :
and tubes (including blanks therefor) all sorts, whether rolled, forged, spun,
cast, drawn, annealed, welded or extruded".
Court held that unless the Excise authorities could establish that the pipe
fittings could no conceivable process of reasoning be brought under any of the
tariff items, resort could not be had to the residuary item. Item 26AA(iv)
encompassed all sorts of pipes and tubes, and it was of no consequence how they
were manufactured. In order to achieve fully the purpose for which the pipes
and tubes were manufactured, it was necessary to manufacture smaller pieces of
pipes and tubes and also to manufacture them in such a shape that they might be
able to conduct liquids and gases, passing them through and across angles,
turnings, corners and curves or regulating their flow in the manner required.
Smaller pieces of pipes and tubes differently shaped were manufactured for this
purpose. They were merely intended as accessories or supplements to the larger
pipes and tubes. There was no change in their basic physical properties or
their end use. There was no reason why they could not be described as pipes and
tubes. In the circumstances, it was different to say that pipe fittings, though
they might have a distinctive name in the market, were not pipes and tubes. The
use of the words ``all sorts''and the reference to the various processes by
which the excisable item could be manufactured were comprehensive enough to
sweep within their fold these goods.
submitted that even if it be found that aprons and cots were correctly
classifiable under Item 68, the benefit of the said exemption notification should
be extended to them because they were "piping and tubing designed to be or
converted in the factory of production into component parts of machinery"
and they did not perform the function of conveying air, gas or liquids.
that behalf our attention was drawn to the judgment of this Court in Jain
Engineering co. vs. Collector of Customs, Bombay, 1987 (32) E.L.T. 3(S.C.).
This was a case relating to rod bushes and camshaft bushes and the question was
whether the appellants, who made them, were entitled to the benefit of an
exemption notification. The notification provided that articles specified in
column (2) of the Table thereof and falling under Heading 84.06 were exempt
from payment of a certain portion of customs duty. Column (2) of the Table not
only mentioned internal combustion piston engines, undoubtedly forming the only
subject matter of Heading 84.06, but it also mentioned other parts thereof.
84.06 did not refer to the parts of such engines.
non-mention had given rise to the controversy. This Court said that it was
clear that the exemption to internal combustion piston engines but also to
parts thereof. When the intention was clear and manifest, it was unreasonable
to take a narrow view of the notification and not to extend its benefit to
parts of the engines referred to in Heading 84.06. To accept the contention of
the Excise authorities that since Heading 84.06 did not mention the parts, the
notification was inapplicable to the parts would be to amend the notification,
which the Court would not do.
Vellapally, learned counsel for the Excise authorities, stressed the
phraseology of Item of piping and tubing of unhardened vulcanised rubber and
not to small parts thereof. He drew attention to the fact that where the
intention was to refer to smaller parts, the item had specifically done so;
thus, in sub-item (4) 'Transmission, Conveyor or elevator belts or belting
...." were spoken of.
drew attention in this behalf to judgment of this court in Collector of Customs
vs. K. Mohan & Co.
1989 (43) E.L.T 811, where the contention on behalf of the assessee that film
rolls of indefinite length and not in the form of individual cut pieces were
more appropriately described as "sheetings", not "sheets",
was accepted. Mr. Vellapally submitted that under the terms of the said
exemption notification piping and tubing covered by Item 16A was exempt if it
was designed to be used or converted in the factory of its production into
component parts of machinery. The intention, in his submission, was to levy
excise duty on the machinery and exempt from excise duty the piping and tubing
made into component parts of the machinery. Aprons and cots did not fall under
Item 16A. They were also not eligible to the exemption given by the said
view, aprons and cots being cut pieces of long lengths of tubes or pipes are
outside the scope of Item 16A;
and tubing", as used therein, refers to lengths of pipes or tubes.
judgment in the case of Bharat Forge & Press Industries (P) Ltd. dealt with
the entry which in terms referred to "all sorts" of pipes and tubes,
by whatever means manufactured. It was, therefore, that this Court held that
the item was comprehensive enough to take within its fold the pipe fittings
made by the assessee.
said exemption notification applies to piping and tubing of unhardened vulcanised
rubber that falls under sub- Item (3) of Item 16A. The sweep of the exemption
notification cannot be increased by the Court to cover goods that do not fall
under Item 16A.
Judgment in the case of Jain Engineering Co. dealt with an exemption
notification that gave to articles mentioned in column(2) of the Table thereof
and falling under Heading 84.06 exemption from payment of certain portion of
customs duty. Column (2) of the Table mentioned internal combustion piston
engines and parts thereof.
84.06, however, referred to internal combustion piston engines but not to parts
thereof. The Courts declined to accept the contention of authorities that the
benefit of the exemption notification could not be given to parts of internal
combustion piston engines because parts were not covered by Heading 84.06. To
do so, it said, would be to amend the exemption notification, which the Court would
Court in the case of Jain Engineering Co. read the exemption notification as it
stood. We also read the said exemption Notification as it stands may not amend
appeal is dismissed with costs.