TMI Blog1987 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... that the packing materials in the form of the three articles are not essential ingredients for the manufacture of the rayon tyre yarn and cord, "despite the fact that the cost of packing is included in the assessable value of these items on clearance under Section 4 of the Central Excises and Salt Act, 1944." 2.An appeal was then filed to the Appellate Collector, who rejected it holding that, use of goods "in connection with manufacture" does not amount to use of goods "in the manufacture". Referring to the arguments of the appellants, namely, that on one hand, the value of packing was included in the value of the goods and, on the other hand, packing materials are not considered as inputs used in the manufacture of the goods, the Appellate Collector observed as follows :- "Therefore, while the appellants are right to the extent of observing that the Government cannot blow hot and cold at the same time and include the cost of packing material in assessable value but exclude it for the purpose of Notification No. 201/79 but then they have produced no evidence that out of the various material referred to by them which one satisfies the criteria laid down in this notification and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any goods falling under T.I. 68 of the first schedule to the Central Excises and Salt Act, 1944 (1 of 1944) hereinafter referred as "the inputs" have been used, from so much of the duty of excise leviable thereon as is equivalent to the duty of excise, already paid on the inputs". 5.In the light of Shri Lakshmikumaran's arguments and in view of the wording of the said notification, the question to be decided by us is whether the packing materials have been "used in the manufacture" of the finished goods manufactured by the appellants and in whose packing they were used, and were, therefore, "inputs" in terms of the said notification. Shri Lakshmikumaran relied on the following case-law in support of his arguments that the three articles were 'inputs' :- (i) 1983 E.L.T. 1896 Union of India v. Bombay Tyre International. (ii) 1985 (22) E.L.T. 306 Union of India Others v. Godfrey Phillips India Ltd. (iii) Order No. 762/86-A, dated 23.9.1986 (Trib.) CCE, Calcutta v. M/s. Union Carbide India Ltd. (iv) Orders dated 20.12.1986 (S.C.) Assistant Collector of Central Excise and Others v. Madras Rubber Factory and Others etc. 6.Shri Lakshmikumaran submitted that the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification (No. 201/79). The Supreme Court made the observations cited above in relation to 'manufacture' and distinguished the expression from 'packing'. Therefore, the ratio is not helpful to the appellants. 11.In '1985 (22) E.L.T. 306' (Union of India Others v. M/s. Godfrey Phillips India Limited and Others) also, the Supreme Court were examining the question relating to valuation, and has no direct application to the question before us. The same is the position with the orders of the Tribunal (Order No. 762/86-A dated 23-9-1986). In this judgment, the Tribunal, examining the question of includibility of cost of wooden packing in the value of dry cell batteries manufactured and cleared by the appellants. Therefore, the ratio of this judgment is not applicable to the facts of the present case where the question raised is different. The Supreme Court's orders, dated 20th December, 1986, cited by the learned Advocate also dealt with the question of valuation only. 12.In '1972 (29) S.T.C. 101' (supra - para 7), the Supreme Court were examining a sales tax matter in which, inter alia, the expression 'used in the manufacture of goods' came up for examination. The Court followed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of cloth. To read the expression 'in the manufacture' of cloth in that restricted sense, would raise many anomalies. Raw cotton and machinery for weaving cotton and even vehicles for transporting raw and finished goods would qualify under Rule 13, but not spinning machinery, without which the business cannot be carried on. In our judgment, Rule 13 does not justify the importation of restrictions which are not clearly expressed, nor imperatively intended. Goods used as equipment, as tools, as stores, as spare parts, or as accessories in the manufacture or processing of goods, in mining, and in the generation and distribution of power need not, to qualify for special treatment under Section 8(1) be ingredients or commodities used in the processes, nor must they be directly and actually needed for 'turning out or the creation of goods'. In our judgment, if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in Rule 13 will qualify for special treatment. This is not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o whether packing containers would be considered as inputs as visualised in Notification 201/79, as amended. In that case, the appellants requested permission to avail of proforma credit on corrugated boxes (received on payment of duty and used for packing carbon element and zinc element) in terms of Notification 201/79 and this was refused by the Assistant Collector and, later, by the Appellate Collector. We reproduce para 6 of this judgment :- "We have carefully considered the facts of the case and the submissions made on both sides. We find that in the decision of this Tribunal in the case of M/s. Hindustan Lever Limited, Bombay v. Collector of Central Excise, Bombay (supra), it was observed that Notification No. 201/79 exempted excisable goods in the manufacture of which any goods falling under Item 68 (referred to as inputs in the Notification) had been used to the extent of duty of excise that had already been paid on the inputs. Whereas the term 'input' is of wide scope, the Department had wanted to narrow or restrict its scope and interpret the Notification to mean that Item 68 goods should enter into the composition and form part of ingredients of the finished goods, i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
