TMI Blog1990 (1) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... ds was objected to by the department on the ground that the inputs are used in the preparation of sand moulds, which are in the nature of equipments and hence inputs so used in the preparation of sand moulds would not be eligible for modvat credit in view of the explanation to Rule 57A of the Central Excise Rules. It was also alleged by the department that the sand moulds were final products falling under sub-heading No. 8480.00 of the Central Excise Tariff 1985 and had been exempted from the payment of duty under Notification Nos. 220/86 and 381/86. Hence credit cannot be allowed on the duty paid on the inputs used in the preparation of sand moulds because of the provisions of Rule 57 (C) of the Central Excise Rules. In the adjudication proceedings initiated under 5 different Show Cause notices, the Assistant Collector held that the appellants are not entitled to take modvat credit in respect of inputs used in the preparation of sand moulds and directed the appellants to credit a sum of Rs. 11,35,890/- for the period from 11-4-1987 to 31-5-1988 and another sum of Rs 4,47,376.35 in respect of the period from 1.6.1988 to 31-10-1988. The appellants took the matter in appeals before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn for exciability: (i) Manufacture; (ii) Marketability and (iii) Specific in Tariff. 4. Merely because moulds are specified in the Tariff they do not become excisable goods unless they are capable of being marketed. It is the burden on the part of the department to prove that the goods are marketable and here there is no evidence adduced by the department to show that the sand moulds in question are marketable; He, therefore, contended that sand moulds prepared by them, being not marketable, cannot be classifiable under Chapter 84.80, since they are not goods. Hence Rule 57(C) is not attracted; 5. As an alternative argument, the learned advocate proposed that even if sand moulds are held to be goods, they are only intermediate products in the manufacture of final product viz. castings. No one produces sand moulds for stock and sale. They are only meant for captive use. Nobody markets them and the moulds are made according to the specific need for the particular castings and hence they could be construed as intermediate product and are eligible for modvat credit in terms of Rule 57-D of the Central Excise Rules. He contended that the inputs need not be present in the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned advocate are not relevant. He therefore pleaded for the rejection of the appeals. 7. Shri Hidayatullah, in reply contended that there is no material which has been produced, excepting, the allegation that the sand moulds are equipment. Clarification of CBEC is not applicable to all types of moulds, unless it is specified. As against the citation of M/s. Kashmir Vanaspati case, Shri Hidayatullah would urge us to consider the ratio of the decision in Bollarpur Paper Mills case. He also contended that the decision of the South Regional Bench is not applicable because that deals with the product, which was a cast iron duplex mould, which is a permanent mould. 8. After hearing both sides and perusing the records, we would like to identify certain undisputed facts involved in these appeals: (i) In put materials in respect of which modvat is claimed are used in the preparation of sand moulds, into which the mould metal is poured for manufacture of castings. Mould metal so poured in the mould would acquire the shape of moulds. ii) These moulds are made separately and independently of melting the pig iron or steel. iii) Sand moulds are not repeatedly in use and dismantle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisability of the sand moulds. The dispute is with regard to the eligibility of modvat credit on inputs used in the preparation of sand moulds. For this purpose, it is necessary for us to consider whether these sand moulds are not hit under explanation to Rule 57 (A). This is the crux of the issue to be considered. Even accepting the assertion made by the learned advocate that moulds other than shell sand moulds are not stable and hence they are not finished excisable goods, the question, still, is required to be considered, as to whether these sand moulds are not hit by the excluded category of items as per the aforesaid explanation or otherwise. Only when the scheme is applicable as laid down in Rule 57(A), the question of going into the applicability of other rules such as 57(C) and 57(D) is required to be considered. We, therefore, hold that the threshold for the whole issue is Rule 57(A) and for considering whether the scheme is applicable or not, the authorities are required to be satisfied that the inputs do not get excluded by the explanation to Rule 57(A). 13. Now we propose to consider this issue in a greater detail, in the context of the admitted position. Sand mould ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct, which is exempted. Since we hold that the Rule relating to, applicability of modvat credit namely 57(A) itself blocks the eligibility of inputs used in the equipments, it is needless for us to consider this aspect. Even accepting the argument of Shri Hidayatullah that some moulds may be unstable and are not marketable, all the same, they remain only in the nature of equipment or apparatus and hence come under the purview of explanation to Rule 57(A). Possibly because of the indispensable nature of this equipment i.e. moulds , the Government have granted exemption to all moulds for metal casting. If some of the moulds are not goods , at the most, they need not claim the exemption, because they are not marketable. On this ground, they do not cease to be an equipment for casting for purposes of interpreting the explanation to Rulef57(A). As regards the argument that sand moulds are intermediate product, this is dealt with along with the consideration of applicability of Rule 57D. The alternative argument proposed by the learned advocate is that the credit should not be denied on the ground that any intermediate product comes into existence during the course of the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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