TMI Blog1993 (10) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... f by this common order. 2. Shri S.K. Bagaria, learned Counsel for the appellants, argued their case. He stated that the issue involved in these appeals is covered in their favour by two decisions (similar to each other) of this Bench. These are Collector of Central Excise v. Emami Paper Mills Ltd. - [1992 (61) E.L.T. 489] and Straw Products Ltd. v. Collector of Central Excise [1992 (59) E.L.T. 572]. The only difference or additional factor now is that one of the disputed inputs is Dandy Cover assessed as a part of machine under the machinery Chapter 84. This item is not covered by the said decisions. The learned Counsel, however, submitted that the same ratio would apply to dandy cover also. He stated that, apart from this item, there is no distinction between the present Appeals and the earlier decided cases cited by him on the factual aspects and the legal position. There is no High Court judgment to the contrary. He pointed out that two principles had been laid down in these cases : (1) The exclusion from the scope of the expression input, as per the Explanation in Rule 57A was only of the listed items and not their parts. (2) The Tariff Classification of the inputs is rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Andhra Pradesh Paper Mills v. Collector of Central Excise - 1990 (50) E.L.T. 252 (4) Delta Paper Mills Ltd. v. Collector of Central Excise - 1992 (62) E.L.T. 58 Continuing the arguments, Shri S. Dutt Majumder, learned Senior Departmental Representative stated that the goods in question in the Singh Alloys case were different from the inputs in the present cases. The Department has also appealed against the said judgment. The case of the materials in question is not a fully settled issue. The object of the Modvat Scheme is to avoid the cascading effect of duty paid on the inputs. The inputs are used in the manufacturing process and get consumed. Machinery is capital investment. The value of capital goods is not to be considered in Modvat Scheme. It is not VAT but Modvat. The modification of the VAT system, is as per the parameters laid down in Rule 57A. He then referred to the Tribunal decisions cited by Shri Mandal which are in favour of the Department and submitted that these represent the correct view. He referred to the HSN Explanatory Notes wherein Dandy Rolls are held to be classifiable under Heading 8439 and hence treatable as parts of machinery. 5. Shri Majumder th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, even if it is held that these items are not complete machines or appliances but are only parts of a machine, they would still be covered by the expression machinery which, by definition in dictionaries, covers not only a set or combination of machines but moving parts of machines also. We observed that the expression machinery appears in the subject Explanation clause in the company of machines, appliance, apparatus, equipment etc. which are complete articles capable of independent functioning and in their company the expression machinery will take on the meaning of complete set of machines and not parts thereof. It was also held by us that the excluded items under the said Explanation Clause being specified therein and parts of machines not being specifically covered it will not be permissible to read parts into the said clause. We then observed that the question whether the inputs under consideration are the excluded type would become relevant only if they are found to be used in or in relation to the manufacture of the specified final products and if the finding is that they are not so used the next test as to whether they are of the excluded type of inputs would be irreleva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it has been decided that for goods used in relation to the machines or for their repair or maintenance modvat is not admissible. Thus lining of a furnace with refractory material for the purpose of removing defects or gaps in the surface of the furnace has been held to be repair and maintenance and not in relation to the manufacture of the final products. The products like ramming mass used for above-mentioned type of use in relation to a furnace have a limited role to play which is in respect of such furnace and not in relation to manufacture. Such is not the case with felt or wire netting which is fitted to the paper making machine where it takes part in the process of manufacture of paper. Such a role is otherwise than as a machine or any other type of excluded goods. It cannot be said that the felt and wire netting are meant only for being fitted in the paper making machine and their role ends there and thereafter they have no further role to play in the manufacture of paper. It was clarified by Shri Lakshmikumaran that these inputs are used for the purpose of draining the water from the wet pulp and for moving the moist or wet web of paper from the machine to the dryer house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of Revenue that the inputs under contention therein, namely, Dolopatch Mix, Magnesite Peas and Ramming Mass used in relation to the manufacture of steel come within the excluded items in the Explanation to Rule 57A as they form part of the machinery as they are really used to protect the machinery and not for the manufacture of the ingots itself was rejected by the Hon ble Court. It was held that the items certainly do not come within the Dictionary meaning of machines or machinery or instruments or appliances. The items are chemicals and have been classified as such in the Tariff. Merely because the chemicals are used for the machinery it does not make the chemicals machinery. It does not matter that the items are used in the Machinery as per the purpose of the machinery. The only relevant question is whether they are used in or in relation to the manufacture of ingots. The Hon ble Court also rejected the argument that the items were appliances meaning something that is applied and remarked that there is no warrant to give this strained meaning to the word. The scope of the expression appliance was also interpreted by the Hon ble Court by reading it ejusdem generis with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .99, 8481.91, 8481.99 specifically cover parts and accessories of particular specified machines. In the scheme of the Tariff if complete machines and their parts are treated separately, the same approach would be appropriate for Rule 57A also. 8. During the arguments before us, Shri Majumder learned Senior Departmental Representative referred to a recent decision of the West Regional Bench of the Tribunal in Divecha Glass Industries v. Collector of Central Excise, Bombay III (Order No. 447/93-WRB) wherein that Bench had disagreed with our views in the Straw Products Ltd. Appeal and referred the matter to the President of the Tribunal for constituting a larger Bench to resolve the conflicting views. The arguments advanced by them while taking the said decision have been more elaborately brought out in their subsequent Order No. 1726-28/93-WRB, dated 22-9-1993 in the case of B.K. Paper Mills v. Collector of Central Excise, Bombay II reported in 1993 (68) E.L.T. 452 (Tri.). We have carefully perused this order and noted the points of difference and the reasons elaborated by them. The position as perceived by us is discussed below. In para 6(7) of the order of the West Regional Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1959, which was as follows :- 15(I) Machinery used in the manufacture of goods and spare parts and accessories thereof (emphasis added), but not machinery and spare parts and accessories thereof specified in any other entry in this or any other schedule. It will straightaway be seen that the crucial entry in the said case specifically covered spare parts and accessories. The Tribunal had held that the wooden tables though they can form part of screen print block tables cannot, by themselves, form part of printing machinery as such. They were of the view that the tables could be said to be parts of screen print tables and confirmed the orders of the authorities below that screen print block tables were not covered by Entry 15 (extracted supra). The Court disposed of the Reference holding that the said Entry covered the goods in question. They examined the definition of machinery in Webster s New Twentieth Century Dictionary : Unabridged, Second Edition (Page 1080). The relevant meaning of the term machinery was as follows :- 1. The component parts of a complete machine 2. Any combination of persons or things, the harmonious working of which results in a desired end. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which when assembled, as it is styled, form a complete machine so also may some such of those parts, which when assembled with the other necessary parts, would form a complete machine be styled machinery but none of these conditions exists in the present case... The word machinery must mean something more than a collection of ordinary tools. It must mean something more than a solid structure built upon the ground, whose parts either do not move at all or, if they do move, do not move the one with or upon the other in interdependent action with the object of producing a specific and definite result. Their Lordships concur with Lord Davey in thinking that there is great danger in attempting to give a definition of the word machinery which will be applicable in all cases. It may be impossible to succeed in such an attempt. If their Lordships were obliged to run the hazard of the attempt, they would be inclined to say that the word machinery when used in ordinary language, prima facie, means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivances, by the combined movement and interdependent operation of their resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are not covered by Entry 15 of Schedule C to the Bombay Sales Tax Act, 1959 in the negative. 12. From the above details of the case, it is seen that the Wooden Tables were fitted with the required articles and put to use in the colour printing of textiles. The entire arrangement was held to constitute a machinery and the tables, its accessories. The finding was not that the tables were themselves machinery. The matter was decided in favour of the applicant - assessee holding the entire set up as a machinery, the question whether the source of power was human or electricity, steam etc. making no difference. The Tribunal s finding that the entire system in question was not a machinery and the tables were not spare parts and accessories of a machine as there was no machinery in the printing as that was entirely done by hand was held to be erroneous for the reasons discussed. This decision relates to a matter quite different from the present one where the question is whether items like felt, wire cloth, bronze metal cloth and Dandy cover are machines or machinery and whether their being machinery parts would make them machines or machinery. The Ambica Wood Works decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onent parts go to complete the machine and enter into its structure. The spare parts and accessories in question serve to make the machine operational. But that is not the same as completing the structure of the machine. The component parts have a limited role to play, namely, to contribute to the composition and structure of the machine. Thereafter they lose their separate identity or role. It is the machine then that takes the centre stage and plays its part in the manufacturing operations. That is not the case with the goods in the present encounter. The items, felt, Wire Cloth and Bronze Metal Cloth are not component parts of the paper making machine. The machine is not supplied, fitted with the same and these items are separately acquired and fitted for use and are replaced as and when they become worn out after use. These items do not lose their identity after fitment in the machine. They retain it and play a specific role of their own. It cannot be said that their functions in paper-making is limited to being merely fitted to the machine and that thereafter they lose their distinct identity and utility. We would, therefore, hold that they are themselves used in the actual ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , extended to goods finding repeated use also, as in the case of catalysts and electrodes some of which are of quite a durable nature and are put to repeated use over a long period. Our articles bid fair for grant of similar treatment. Their role is as much in the manufacturing process as that of Titanium Anodes used in the manufacture of caustic soda which has been held to be a modvat-friendly function. In fact, the earlier decision of the Tribunal in regard to eligibility of Titanium Anode for the benefit of Notification 201/79 in Collector of Central Excise v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. reported in 1988 (35) E.L.T. 227 holds the field as the appeal by Revenue to the Hon ble Supreme Court has been dismissed as briefly reported in 1991 (52) E.L.T. A101. The said notification, prior to its amendment in March 1982, provided exemption from duty to the extent of duty paid on goods used only in the manufacture of the final product. It was not denied on the ground that their use was only as a part of the electrolysis plant. Modvat Credit, on the other hand, is admissible for goods used not only in the manufacture of final products but also for those used in relation to thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f articles like felt, machine cloth etc. stands on an entirely different footing, as already discussed. 18. The judgment of the Hon ble Supreme Court in Star Paper Mills -1989 (43) E.L.T. 178 has been taken up for examination by the West Regional Bench in Para 8(3). In Para 9 of their order they have drawn the conclusion that their approach would appear to be in line with that of the Apex Court. In that case, the question was whether paper core would be eligible for the benefit under Notification 201/79 for use in the manufacture of the excisable product, paper. It was held by the Hon ble Supreme Court that such cores can be allowed benefit in terms of Notification 201/79 only when paper is cleared from the factory and marketed in the form of rolls and it cannot be treated as component for paper cleared in sheets, reams. It was held that paper core would be constituent part of paper cleared in rolls and would fall within the term component part used in the Notification insofar as manufacture of paper in rolls is concerned. Paper core was, however, held to be not used in the manufacture of paper in sheets as component parts. On the basis of this finding of the Hon ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ols or appliances. This criterion not being there in the provision considered by the Supreme Court, the judgment cannot be taken to be an authority for the proposition that paper cores are machines or, for that matter, part of machines and on that account credit was deniable. As discussed already, the inputs in question are not themselves any of these items. Hence, this finding of ours is in no way inconsistent with the Supreme Court finding in Star Paper Mills case. 20. As regards Dandy Covers which item figures in proceedings before us for the first time, the South Regional Bench has held in Andhra Pradesh Paper Mills v. Collector of Central Excise, reported in 1990 (50) E.L.T. 252 that Modvat benefit is not admissible. We feel that the decision on Felts, Wire Cloth etc. would equally apply to Dandy Covers also. 21. Three issues have been framed by the West Regional Bench for being referred to the larger Bench in view of their disagreement with our decisions in Straw Products Ltd. and Emami Paper Mills cases. As to whether the Rules of Interpretation in Section Notes and Chapter Notes meant for classification of excisable goods for levy of duty could be a safe and reliable ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l meaning if there is no ambiguity. Rule 57A allows Modvat Credit on inputs used in or in relation to the manufacture of specified final products provided the inputs also have been .notified under the said rule. Under the said rule machines, machinery, plants, equipments, apparatus, tools or appliances used for producing or processing of any goods or for bringing out any change in any substance in or in relation to the manufacture of the final product" have been excluded. Vide the Tribunal s decision reported at 1992 (61) E.L.T. 489 (supra) machine cloth used for drying the wet pulp and carrying moist web to dry it and convert into paper is not to be treated as machines, machinery, equipments etc. The inputs in the present case are similar to the above cloth. Such cloth or felts are at the best part of machines and machinery and not complete machinery or tool or equipments by themselves. The legislature is supposed to have said what it meant and to have meant what it has said. If the intention was to deny the Modvat credit on parts of machinery there was nothing to prevent the legislature to say so in clear and unambiguous terms. 4. In view of the foregoing the appeal is all ..... 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