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TMI Blog1985 (7) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted them to re-make them with the help of a secondary manufacturer at Calcutta in terms of the special procedure laid down in rule 56C of the Central Excise Rules, 1944. The short point that falls for decision in this case is whether the respondents are entitled to take the re-made bushings into use in their factory free of duty under Rule 56C(2) or, in the alternative, under exemption Notification No. 118/75-C.E., dated 30-4-1975. 2. Before commencing discussion on the point of dispute, it would be helpful to notice the relevant portion of the rule as well as the exemption notification: "56C. Special procedure for the movement of finished goods falling under Item No. 68 without payment of duty. (2) The finished goods brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in this notification shall be allowable subject to the observance of the procedure set out in Chapter X of the Central Excise Rules: Provided further that nothing contained in this notification shall apply to complete machinery manufactured in a factory and meant for producing or processing any goods, even if they are intended for use in the same factory in which they are manufactured or in any other factory of the same manufacturer." 3. The respondents claimed exemption under the notification in their classification list dated 10-6-1981. The Asstt. Collector rejected their claim holding that since the notification exempted the goods manufactured in a factory and intended for use in the same factory or in another factory of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts being pointed out on the basis of the original record, the respondents did not press for their objection. Hearing of the appeal then started. 5. The learned representative of the department made three points why the claim of the respondents for duty free captive use of the re-made bushings could not be allowed :- (1) The bushings were neither raw material nor component parts for the manufacture of excisable goods. They were a spare part. Hence 1 he condition of rule 56C(2)(c) for duty free removal was not satisfied. (2) Rule 56C and Notification No. 118/75-C.E. were parallel provisions, hence mutually exclusive. The respondents, having availed of the rule, were no longer entitled to the notification. (3) The notification, by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir favour, there could be no occasion for them to challenge it. The respondents simultaneously put forth an alternative plea that both rule 56C and notification No. 118/75-C.E. were statutory provisions and there was no bar laid down anywhere that an assessee could not avail of both. The rule, as it read, was a "special procedure". The procedure could not take away their statutory right to exemption. Coming to the notification itself, they stated that it did not say that the goods should be fully manufactured in the user factory. 7. We have carefully considered the matter. We find that the department's objection regarding inapplicability of rule 56C(2) is mis-conceived. It is not that the entire old bushing is sent to the secondary ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us entitled to remove the platinum sheets for captive use free of duty. What they finally make out of them is bushings - an article falling under item 68 of the tariff. Since it is they who manufacture the bushings and since they use them further as spare parts in the same factory, the exemption under the notification becomes available to them when it comes to assessing the bushings themselves. Rule 56C' cannot be a bar at this stage in any case since the rule already stood complied with at the stage of sheets with which the rule was concerned. 8. There is another way to look at the problem. Assuming that rule 56C applied to the complete re-made bushings, as contended by the department, clause (c) in rule 56C(2) is not the only method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d converts them into sheets, all other work- pre-cleaning, fabrication, welding and fitment of several parts - is done by the respondents. Their part of the work in re-making of the bushing is far greater than that of the secondary manufacturer. Assuming that the activity of remaking the bushings amounts to manufacture and not merely repair, the respondents, as the manufacturers of the bushings, would be entitled to claim assessment of the bushings under item 68 read with Notification No. 118/75-C.E. 10. In the view of the matter we have taken in paragraphs 7 to 9 above, we do not consider it necessary to go into the new plea of the respondents that their activity amounts to repair only and not manufacture. 11. In the result, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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