TMI Blog1991 (10) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... on under Rule 57A. In the appeal before us, it has been contended that these goods are used by the respondents for making the surface of their product, paper, smooth and for absorbing the excess contents of water in the pulp and that they are neither used as input nor raw material in or in connection with manufacture of paper. Therefore, these goods are in the nature of appliances and equipments used for bringing about change in a substance and hence MODVAT credit is not admissible. It has, therefore, been urged that the Order-in-Appeal be set aside and the Assistant Collector s Order-in-Original upheld. 2. Shri M.N. Biswas, learned S.D.R. argued the Collector s case when the appeal was heard by us. He adopted the reasoning contained in the appeal memorandum and pleaded that the appeal be allowed. 3. Shri S.K. Bagaria, learned Counsel for the respondents gave a strong counter to the contentions raised in the appeal. He submitted that the goods in question had been classified by the Assistant Collector in his Order-in-Original under Tariff Heading 5909. Under Chapter 59, Textile fabrics and Textile articles of a kind suitable for industrial use are covered. Machinery, machines, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. v. Union of India, reported in 1989 (44) E.L.T. 420 wherein It had been held that exemption to Television camera was not extendable to lenses. Lenses are no doubt parts of the camera but all the same they were not treated as the camera which was the exempted item. In so many Tariff Headings and Notifications where the intention is to cover parts also they have been specifically included. In Rule 57A only machines, machinery tools etc. are mentioned but parts are not. Proceeding further, Shri Bagaria fairly conceded that two Tribunal decisions are directly against him. These are (1) Collector of Central Excise, Patna v. Ashim Paper Products, 1990 (50) E.L.T. 120 (Tribunal); (2) Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise, 1990 (50) E.L.T. 252. In the former case decided by a Single Member Bench of this Regional Bench itself Wire Mesh and industrial cloths used for removing moisture from the wet pulp were held to be in the nature of appliances. The learned Counsel submitted that in view of the arguments advanced by him about the scope of the term appliances which term appears in the heading of Chapter 84 and in view of the specific exclusion of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llector of Central Excise, 1990 (50) E.L.T. 172. (8) Collector of Central Excise v. Bharat Aluminium Co., 1987(29) E.L.T. 569. He also raised a legal point that the notice for the alleged wrong availment of credit having been issued on 16-2-1988 in respect of credits utilised in March, May and July, 1987 was time barred there being no allegation of any suppression fraud etc. He relied upon the decision of this Bench in Collector of Central Excise, Patna v. TELCO reported in 1990 (28) E.C.R. 522 for this stand taken by him which he submitted was an alternative ground without prejudice to the arguments advanced by him on the merits of their case. He, therefore, pleaded that the department s appeal be dismissed. 5. Shri M.N. Biswas, learned S.D.R. gave his rejoinder to the contentions raised by Shri Bagaria. He contended that the scope of the term machine, machinery etc. which the learned Counsel had extracted from the Section and Chapter Notes and headings of the Central Excise Tariff have no application to MODVAT matters. The said notes are for a limited purpose as stated in the Notes themselves, namely for interpreting the tariff only. The said Notes do not say that the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondents in the Paper Book. 7. The solution to the present problem lies in the correct interpretation of the terms used in or in relation to the manufacture of and the scope of the expressions machine , machinery etc. which are referred to specifically in the Explanation clause under Rule 57A as not being included within the scope of the term inputs". Pausing here for a moment, we take note of the submission in the appeal that the items in question are/were neither used as input nor as raw material in or in connection with manufacture of paper. This argument advanced for pressing the point that MODVAT credit is, on that score, not available thereon, is totally untenable. Nowhere in the scheme of the MODVAT provisions is there any requirement that the goods should be used as raw material. The term input figures in Rule 57A as an abbreviation to refer to goods used in or in relation to the manufacture of the final products . Nothing then turns on the actual meaning of the term inputs . The specific provision in the Explanation clause under Rule 57A that the term inputs does not include machines, machinery, plant, equipment apparatus, tools or appliances would in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been referred to in para 5 supra do not advance his argument that the principles laid down in the said judgments would justify the treatment of the goods in question as machinery. The Supreme Court in the above mentioned case, had observed as follows :- Therefore, the word marble has to be interpreted, in our considered opinion, in the scientific or technical sense and not in the sense as commercially understood or as meant in the trade parlance. There is no doubt that the general principle of interpretation of Tariff Entries occurring in a text statute is of a commercial nomenclature and understanding between persons in the trade but it is also a settled legal position that the said doctrine of commercial nomenclature or trade understanding should be departed from in a case where the statutory content in which the Tariff Entry appears, requires such a departure. In other words, in cases where the application of commercial meaning or trade nomenclature runs counter to the statutory context in which the said word was used then the said principle of interpretation should not be applied. Trade meaning or commercial nomenclature would be applicable if a particular product descr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir own earlier decision in State of Mysore v. M.N.V. Rao wherein they had taken note of the dictionary meaning of the term machinery . It was found that the term applies to mechanical contrivance containing several parts, each expected to make certain operation. In the judgment of the Privy Council in Corporation of Calcutta v. Cossipore Municipality it was observed that machinery is a contrivance whereby several things are put together to work in such a way that force may be applied to get a particular work done or manufacture goods. In Engineering Traders v. State of U.P. (1973) 31 S.T.C. 456,1973 UP TC 91 the dictionary meaning of machinery as a machine in general or a functioning unit was referred to. Machinery in a generic sense includes all appliances and instruments whereby energy or force is transmitted and transformed from one point to another. In that sense, it will include simple appliance like a lever to a complicated machinery employed in mills and factory. It was held that pumping sets were machinery. The Hon ble Gujarat High Court had held in Ambica Wood Works v. State of Gujarat, 43 S.T.C. 338 that some solid structure with no moving parts (underlining ours) cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , nor their utilisation in a process involving application of electrical power convert them into electrical goods as contemplated by the Entry in the Madras Act. Going by the analogy of the Madras judgment the present products which are articles of textile material, the duty paid on which as such textile material is sought the benefit of MODVAT credit, cannot be equated with the machinery nor can it be considered a part of such machines. The Kores decision regarding typewriter ribbon not being a part of typewriter in the context of the Mysore Sales Tax Act would also support the view that machine cloths are not to be treated as parts of the paper making machines. 12. Shri Bagaria had referred to a series of decisions where goods used in a machine in the manufacturing process had been granted the benefit of MODVAT credit e.g. Oxygen and acetylene gases used in welding process. The contention of the department that such gases are in the nature of tools for cutting etc. was rejected. Again, certain more tangible and more durable items like Titanium metal anodes, Aluminium Cathodes, Aluminium sheets etc. have also been treated as eligible inputs. These have been referred to in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d paper-making chemicals and for pump mills, pulping and bleaching chemicals are referred to. Other consumed materials mentioned are felts and wires for the paper machines and washers tolls spare parts etc. Felts and wires which are same as industrial cloth and wire mesh used for manufacture of paper are thus treated as same articles. However, the question whether machine cloth etc. are consumable goods or not is immaterial for deciding MODVAT admissibility. Only relevant test would be whether they are used in or in relation to the manufacture of paper and if so whether they stand excluded from the definition of inputs as given in the Explanation clause under Rule 57A. Though in the foregoing discussions, we have dealt extensively with these questions and held that they are not excluded, the question requires to be further examined in view of the point raised by Shri Biswas with reference to the decision of the South Regional Bench of the Tribunal in Sathya Steel Strips v. Collector of Central Excise, reported 1988 (38) E.L.T. 485. 17. In the Sathya Steel Strips case the goods for which MODVAT credit was claimed were ramming mass. The said material was described as being used to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we fully share their earlier views expressed in the Cominco Binani case. The products in question are consumable products used in the machines for the manufacture of paper but are not machines themselves. We do not agree with the - view that their role is limited to being fitted in the machines and therefore, their use is in relation to the machines only and not in relation to the manufacture of paper. The subject inputs can be said to be used in or in relation to the manufacture of the final product paper and not limited to the manufacture or assembly of the machine. 19. While we have come to the conclusion that the respondents are eligible for MODVAT benefit in respect of the subject inputs on merits, we find sufficient force in the alternate plea also of the respondents that the demand for disallowing the MODVAT credit utilised by them on the ground that it had been wrongly availed by them is hit by time bar. The learned Counsel relied upon our decision in Collector of Central Excise v. TELCO, reported in 1990 (28) E.C.R. 522. Questions on the applicability of time bar for such demands and the retrospective application of the amendment to Rule 57-1 carried out on 6th Oct., 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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