TMI Blog2002 (8) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... 998 [1998 (102) E.L.T. 387 (Tri.)], upheld the order passed by the Commissioner (Appeals). In the meantime, in regard to the earlier order Court, on 1st July, 1997, had directed the Tribunal to refer questions of law to this Court for opinion. Accordingly, the following questions of law have been referred to this Court for opinion : 1. "Whether, in the circumstances of the present case, facts of which are not in dispute, duties paid on material, namely, plastic films/poly paper used for testing machines for forming commercial/technical opinion as to their marketability/excisability would be eligible to be taken as credits under Rule 57A read with relevant notification?" 2. "Whether such use of material in testing in view of the purposes mentioned above, could be said to be 'use in the manufacture of' or use in relation to the manufacture of the final products viz., Machines as assembled?" 2.Heard Shri A.P. Mathur, learned Counsel for the applicant and Shri S.P. Kesharwani, learned Standing Counsel for the respondent. Both the parties have also submitted their written note of submissions. We have carefully gone through the entire documents, placed before us, including the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , specify in this behalf, for the purpose of allowing credit of any duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereinafter referred to as the 'specified duty') paid on the goods used in or in relation to the manufacture of the said final products (hereinafter referred to as the 'inputs') and for utilizing the credit so allowed towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the said notification, subject to the provisions of this section and the conditions and restrictions that may be specified in the Notification : Provided that the Central Government may specify the goods or classes of goods in respect of which the credit of specified duty may be restricted. Explanation. — For the purpose of this rule, 'inputs' includes — (a) inputs which were manufactured and used within the factory or production in or in relation to the manufacture of final products, and (b) paints and packaging materials, but does not include — (i) machines, machinery, plant, equipment, app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant that the applicant is engaged in the manufacture of Automatic Form Fill and Sealing Machines, which are used by the purchasers for packing and sealing their products in plastic pouches. Before the machine is ready to be marketed and can be said to be finally manufactured, the applicant has to use Laminated Plastic Films/Poly Paper for the purpose of testing, tuning and adjusting various parts of the machine so as to ensure that they are fit and ready for packing and sealing the required size of pouches. It is the case of the applicant that the purchasers place their orders to the applicant mentioning the specifications of the pouches, which they require for packing and sealing their products. Unless and until tuning and adjustment is done by the applicant with the help of Laminated Plastic Films/Poly Paper, the machine cannot be tuned and adjusted in accordance with the purchase order and the same will not be purchased by the purchaser. In other words, without tuning and adjustment to make the machine inconformity with the specifications of the purchaser, it cannot be said that the machine has been manufactured. Manufacturing is not complete unless the tuning and adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture'' used in Rule 57A is a term of extremely wide import and it does not admit of any exclusion on the basis of the stage of production or whether the inputs have been used interior or posterior to manufacture. If the use of inputs has nexus to the manufacture, that would suffice. However, in the instant case, the applicant has used the inputs, in question, in the course of manufacture itself for the purposes of tuning, adjusting and finishing the machine so as to make it in conformity with the specifications mentioned in the purchase orders. The inputs i.e. Laminated Plastic Films/Poly papers are used by the applicant in or in relation to the manufacture of the machines. According to the learned Counsel there is no scope for doubt when the raw materials/inputs are actually used in the main stream of manufacture of final products, that is, actually used in the physical or chemical processes of manufacture. It is certainly an input used in the manufacture of final products. Doubt may arise only in regard to use of some articles not in the main stream of the manufacturing process but in another scheme of manufacturing something, which is to be used for rendering final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns clearly shows that the aforesaid argument is misconceived. 17.Learned Counsel for the respondent has relied upon Section 2(f) of the Central Excise Act, 1944, which defines the term "manufacture" and submitted that the word "manufacture" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also a person, who engages in the production or manufacture, on his own account. Learned Counsel for the respondent has also referred to Rule has submitted that the term 'input' includes (a) inputs, which were manufactured and used within the factory of production in or in relation to manufacture of final products, and (b) paints and packaging materials. It is, therefore, implied from the aforesaid provision that only those goods, which are used within the factory in or in relation to the manufacture of final products, can be regarded as "input". Thus, the most important term requiring interpretation is the interpretation of the term "in or in relation to the manufacture". It has been contended by the learned Counsel for the respondents that it is clear from the definition of the term "manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and marketed or marketable in the market as such. This view finds support from the decisions of the Supreme Court in Bhor Industries Ltd., Bombay v. Collector of Central Excise, Bombay, 1989 (40) E.L.T. 280 (S.C.) = 1989 (1) S.C.C. 602; South Bihar Sugar Mills Ltd. Etc. v. Union of India and Others, 1978 (2) E.L.T. (J 336) (S.C.) = 1968 (3) S.C.R. 21; Union of India v. Delhi Cloth and General Mills Ltd., 1977 (1) E.L.T. (J 199) (S.C.) = 1963 Supp. 1 S.C.R. 586; Union Carbide India Ltd. v. Union of India and Others, 1986 (24) E.L.T. 169 and Civil Appeal No. 2215 (NA) of 1988; Collector of Central Excise, Baroda v. M/s. Ambalal Sarabhai Enterprises, 1989 (43) E.L.T. 214 (S.C.) judgment delivered on 10th August, 1989. In the case of Empire Industries Ltd. and Others v. Union of India and Others, 1985 (20) E.L.T. 179 (S.C.), reported in paragraph 4 of the judgment, the Supreme Court has explained the concept of "Process" in Excise Law. In view of the principle laid down therein and other relevant decisions, processes incidental or ancillary to wrapping are to be included in the process of manufacture, manufacture in the sense of bringing the goods into existence as these known in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f excise paid on goods falling under Tariff Item 68, when these goods were used in the manufacture of other excisable goods. The said notification stated that in supersession of the Notification No. 178/77 of the Central Excise dated 18th June, 1977, all excisable goods on which duty of excise was leviable and in the manufacture of which any goods falling under Item No. 68 have been used, were exempted from so much of the duty of excise leviable thereon as was equivalent to the duty of excise already paid on the inputs. In that case, the question before the Tribunal was whether the nameplates could be considered as component part of the electric fan, so as to be eligible for proforma credit under the exemption notification. It was found by the Tribunal that no electric fan could be removed from the factory for being marketed without the nameplate. The Tribunal also noted in that case that even though it could be said that electric fans could function without the nameplates, for actual marketing of the fans, the affixation of the nameplate was considered an essential requirement. To be able to be marketed or to be marketable, it appears to us, that it was an essential requirement to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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