TMI Blog1996 (2) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... d the claim and on appeal, this order was confirmed by the Appellate Collector. The common appellant in Appeals E. 405 to 408/94 is a similarly situated manufacturer who also suffered similar adverse orders. 3.The South Regional Bench which heard Appeal E. 209/89 referred it to a larger Bench. Consequently, the remaining appeals were also referred to a larger Bench. That is how these appeals have come up before this larger Bench. 4.Shri K. Narayanan, Advocate appeared in Appeal E. 209/89-MAS, Shri V.P. Namasivayam, Consultant appeared in Appeal Nos. E. 405 to 408/94-MAS and Shri Sanjeev Sachdeva, SDR for the Revenue. We have also heard Shri V. Sridharan, Advocate in appeals where similar question has been raised. 5.It is necessary to be clear about the claim of the appellants who manufacture steel castings. For such manufacture, sand moulds are necessary. Sand moulds may be green moulds or dry moulds etc. In these cases, the appellants are using dry sand mould. Shri Sridharan stated that his client uses green sand mould. Shri K. Narayanan and Shri Namasivayam explained the process of manufacture in the following terms :- Mould is necessary for making steel castings. Wax mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Rules, appellants are entitled to credit on the duty paid on chemicals and resin. Both sides pointed out that there are conflicting judgments of the various Benches of the Tribunal. 7.In Mukund Iron and Steel Works Ltd. v. Collector of Central Excise -1990 (48) E.L.T. 552 (T) and Shivaji Works Ltd. v. Collector of Central Excise -1990 (50) E.L.T. 50 (T), the West Regional Bench took a view in favour of Revenue. The question in the first case related to Foundry chemicals or Binders used for preparation of sand moulds. It was noticed that without sand moulds, castings cannot be produced. But the only dispute raised was whether sand moulds are excluded under Explanation to Rule 57A of the Rules being in the category of equipment or apparatus. The Bench took the view that the sand moulds are recognised in Central Excise Tariff as falling within the category of equipment, apparatus and appliances and specific exemption has been given to sand moulds under Heading 84.80. Therefore, it was held that the sand moulds are to be considered as equipment or apparatus used for the purpose of castings. It was noticed that the appellants had no case that sand moulds go into the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary. The Bench was not inclined to accept that the tariff item regarding moulds and the exemption given to the sand mould and the clarifications of the Board would make any difference. In the second case, the Bench held that sand moulds being unstable and not marketable are not goods or excisable goods. In this view the fact that moulds fall within tariff item and the Government chose to grant exemption for sand moulds would not render the same excisable goods. The Bench also held that sand moulds cannot be regarded as goods within the Rule 57A since they are not excisable goods. 9.One of the controversies raised is whether sand moulds are goods or excisable goods. In Collector of Central Excise v. Ambalal Sarabhai Enterprises -1989 (43) E.L.T. 214 (SC), the Supreme Court which considered a similar controversy regarding starch hydrolysate held that there was no evidence to show that starch hydrolysate was ever marketed and in the light of the nature of the goods being highly unstable and quickly fragmented and losing its character in a couple of days, it was highly improbable that it was capable of being marketed and therefore it was not dutiable goods. It was also indicated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are such inputs used in or in relation to the manufacture "of steel castings". 12.In J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. The Sales Tax Officer, Kanpur, and Another - 1965 (16) STC 563, Supreme Court had occasion to consider the expression "used in the manufacture or processing of goods for sale" in the context of Sales Tax Law. The question was whether items like coal, lime, cement, textile design block could be said to have been used in the manufacture of yarn. The Supreme Court held that manufacture of goods should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods, and where any particular process is so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, that process would fall within the expression "in the manufacture of goods". In Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, Bihar, and Others - 1965 (16) STC 259, the Supreme Court held that locomotives and motor vehicles used to transport ore from the mines to the factory to enable ore being converted into copper products, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle which is necessary to render the final product marketable. It is an article which has a significant role to play in the manufacture of the final product without being used in the main stream of the manufacturing process but without the use of which the final product will never come into being. When such is the case, it is reasonable to conclude that sand mould is used in relation to the manufacture of final product, namely steel castings. It is logical to hold that chemicals or resin which are used in the sand mixture for the purpose of producing sand mould are used "in relation to manufacture of final product", namely steel castings. The contrary view taken in Mukund Iron Steel Works Ltd. v. Collector of C. Excise -1990 (48) E.L.T. 552 (T) and Shivaji Works Ltd. v. Collector of C. Excise - 1990 (50) E.L.T. 50 (T) is not correct. 15.In the light of what we have indicated above, it is unnecessary for us to consider the alternative contention as to whether sand mould is an "intermediate product". 16.In the result the impugned orders are set aside, holding that appellants are entitled to take Modvat credit for the duty paid on chemicals or resin used in the preparation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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