1. Issue in these appeals revolves on the eligibility for the benefit of Notification No. 56/95 which grants exemption to goods specified in column (4) of the said Table subject to the conditions, if any, laid down in column (5) thereof. The relevant entry reads as ----------------------------------------------------------------S. No. Chapter No. or Description Rate Conditions Heading No. sub of goods---------------------------------------------------------------(1) (2) (3) (4) (5)---------------------------------------------------------------39 85.43 Machinery 10% ad for the valorem 2. (a) The entities, claimed for benefit of the notification and under dispute, are falling under Heading No. 85.43. The appellant is a manufacturer of Electro Plating Plant, & Equipment's. The entities under dispute were, by an earlier order on 22.6.93, granted the benefit under Notification 51/93 by holding that the said entities were used for production of a commodity and classification list were duly approved for 1993-94.
(b) The Assistant Commissioner vide Order dated 9.5.1996, for classification with effect from 10.5.96 found - "...The machinery in question in this case is undisputedly Electroplating Machinery and parts thereof. The assessees contention is that there are several processes which go into the production of a commodity and each such process therefore is to be considered as for the production of a commodity. However, in the instant case, I observe that even though the electroplating may enhance the utility of item on which electroplating is done, this process does not bring into existence any new commodity. Electroplating is undertaken on a commodity after the commodity has already been produced and the process of electroplating helps the commodity only to add to its qualities. Electroplating is the mere process wherein no commodity comes into existence..." (c) The Commissioner (Appeals) relying on the decision of 1996-(088)-ELT -0796 -TRIB Canning Mitra Phoenix P. Ltd. V.Commissioner of Central Excise, denied the benefit, ignoring the following certificates produced before him: i) letter from Corrosion Science and Engineering Programme, IIT, Mumbai.
ii) Department of Metallurgical Engineering & Material Science, I.I.T, Mumbai iii) Central Electro Chemical Research Institute, Karaikudi, Tamil Nadu He confirmed the order on denial of exemption, duty demand and penalty.
Hence these appeal.
3. After hearing both sides & considering the material produced it is found- a) The Tribunals decision in case of Canning Mitra Phoenix P. Ltd (1996 (88) ELT 796 (Tribunal) were not based on any technical expert advise. The decision in 4 thereof records- "4.............The Notification confers benefit only in respect of machines used for the production of commodity. Hence, on perusal of the relevant Tariff item. It covers electrical machines having individual function not elsewhere presented in the chapter from this heading the notification seeks to confer the concessional rate only in respect of machines listed therein. Hence the question for consideration is whether it is all machines capable of producing a commodity. The answer to this question cannot be given in favour of the appellant. The context of levy of duty on an item subjected to electro plating, the ruling given by the court is that mere electro plating does not amount to manufacture and cannot be said to bring into existence a new commodity. Hence a machine exclusively for electro plating cannot be said to bring into existence a new commodity. Hence a machine exclusively for electro plating cannot be said to bring into existence a commodity. The decision of the Tribunal relied upon by the Ld. Advocate also does not seem to come to their rescue Electro plating may be incidental for the manufacture of a product, but here the exemption is in respect of a machine for production of a commodity and not in respect of a machine used in or in relation to the production of a commodity." These findings of the Tribunal relied by Revenue to deny the exemption, are being differentiated by the appellants on the grounds- i) The notification uses the term 'machinery used for the production of a commodity', & not 'manufacture of a commodity.
ii) The tribunal has interpreted the machine 'per se' to be capable of manufacturing a commodity, which condition is being read in the term used in the notification, which is not permissible in law.
Capability & conditions not specified in the terms used in notification & reading & applying the same is contrary to the decision of the Hon'ble Supreme Court in case of Hemraj Gordhandas (1978 (2) ELT J350.
iii) The nature of machines falling under 85.43, is machines, apparatus etc performing individual & not entire functions by themselves. Therefore & seeking to apply the exemption to a machine 'per se' capable of manufacture & not perform incidental or in relation to notes under 85.43. The heading cover machines under 85.43 & none of these entitles would be covered by such an interpretation as is being resorted by Revenue reading the exemption not applicable to any entity under 85.43. Interpretations which would render an exemption a nullity are not permissible.
iv) The words 'used' employed in the term under reference would extend the benefit to an use even for part of the process of production of a commodity. There is no cause to interpret the word 'used for' in a restricted manner. Similarly the word 'production' cannot be used in a restrictive meaning to encompass only "manufacture" as understood under the Central Excise Act'.
v) The tribunal has not interpreted the term used in the notification strictly.
We find sufficient force in the submission made by the appellants and are therefore unable to persuade ourselves to apply the ruling and the interpretations as arrived at in the case 'Canning Mitra Phoenix Private Ltd (1996 (85) ELT 796 & find that what the notification requires and exempts is a 'machine used which would result in the emergence of a different/charged commodity.' b) Examining the Technical specifications/certificates as produced before us, which were not considered by the lower authority or the Bench in the case of Canning Mitra Phoneix (P) Ltd (supra) it is found- (i) Prof A.S. Khanne, Ld. Professor of I.I.T Bombay, certifies Electroplating & Electro Machining as two essential ways of fabricating and manufacturing specialised items, after discussing Electroplating & its convential benefits, he informs- "In the case of Electro making there is no doubt that it is one of the most advanced machinery process which is a substitute for convential lathe process which cannot attain very fine finish to special components. The manufacturing of special components of textile machinery which require very precise contours, electro machining is the only solution otherwise one has to go for still advanced routes of Laser cutting." ii) The certificate of Central Electrochemical Research Institute Kari Kudi 630 006, Tamil Nadu, certifies Electroplating does result in the production of a commodity and lists interalia Ball Bearing, Bang PCB & other electronic components & further goes to certify that without this process the products will not be acceptable as a 'commodity' in the market iii) Certificates produced from Customers engaged in Motor cycle, Auto a component Textile & bearing manufacturers on perusal prove that the commodities therein cannot emerge, till electric plated in the sequence. The process of over plating to achieve a deposit in bearing manufacture read as- "........In the highest capacity copper alloy hearing the finished copper or steel is first plated on the inside with a heavier plate of nickel, then over plated with lead tine copper over plate absent.
OOI" thick The finished bearing including the back is then flash plated with tin or lead....." Without the use of these machines, impugned, herein, the commodity like Bimetallic Bill Bearings or PCB electronic circuits with the fins deposits of the only conclusion that the impugned machines are essential & required for producing a commodity, where fine Electro machining is required & without these machines these essential commodities cannot be produced. Once, based on Technical literature it is concluded that the impugned entities are used for producing many specific commodities, which require ultra deposits of various metals, there is no doubt left about the eligibility, to be covered by the terms used in column 3 at Serial No. 39 of the table notification 56/95. Since the impugned entities unquestionably are classified under heading 85.43 the denial to the notification cannot be up held, as arrived by the authorities, without considering & ignoring the Technical Literature of the actual use.
c. It is trite law to say that production implies change in the article on account of treatment to an article, yet every such manipulation may or may not result in 'manufacture', as understood the Central Excise law (see catene of decision following Union Of India v. Delhi cloth Mills 1977 (1) ELT 199 (SC). The word 'production' is to be understood in that context, that there may be production of on intermediate or final commodity yet such production of a commodity will not amount to manufacture. The use is of a term 'production of a commodity' and not 'manufacture' of a commodity or manufacture of goods has been used by legislature in the notification that would keep the coverage of 'any charge' brought in an article, by manipulation. The results may be emergence of a commodity which would be sufficient, such emergent commodity may be or may not be mentioned as goods in the Central Excise Tariff . The coverage under the term used in the notification is therefore, wide enough to cover the entities herein.
d) The word 'commodity' would encompass any tangible thing produced of advantage to mankind as per the dictionary meaning & cannot be restricted to only 'Excisable Goods' under Central Excise Act 1944.
e) Appellants have supplied their goods to M/s Bajaj Auto Ltd for carrying on Nickel, Chrome & Iron plating of various components. The tribunal in the case of M/s Bajaj Auto Ltd (1995 (80) ELT 644 had held the process so employed Bajaj Auto Ltd, to be a process of manufacture. That view has been upheld by the S.C. The differentiation arrived & canvassed that the process in case of Bajaj Auto Ltd were initiated & ancillary, cannot be upheld. That does not enthuses us to deny the benefit to the exemption in the present case. Following Gujarat High Court decision in the case of Industrial Machinery Manufacture (P) Ltd (1965) 165 TC 380 wherein the -Division Bench had rejected the contention that machinery must be something that are meant for the actual process of manufacturing of goods, & also Modison Metal Refuser 1996 (88) ELT 292 (Tri) where in electroplating process was considered to be manufacture, would lead to granting of the eligibility, the entities herein to notification 56/95 keeping in mind the use.
f) The appellants have relied upon the finding of this Tribunal in the case of CC v. Escorts (1991 (54) ELT 144 (tri) upheld by apex Court (1997 (96) ELT 504 SC) wherein a machine for cleaning of parts/ components by ultrasound waves & thereby improving their function was held to be a machine designed for production of a commodity. Similarly in case of CC v. Mc Dowell Co 1997 (94) ELT 215 an Agitator machine which merely was to agitate/mix & keep partially polymerised hydro carbon was held to be a 'machinery used for production of a commodity' Following these decisions, we have no hesitation to consider the entities impugned herein to be covered by the terra 'machine for the production of a commodity' as used in notification 56/95 at Sr No. 39 of the Table there to. Since the use is definitely to improve the function or & perform at an intermediate stage on import function for the manufacture of the final products.
g) Since the duty exemption is found to be eligible, the duty demands as made & penalty as arrived at cannot be upheld. h) The appellants dwelt at length on the clause of no suppression & no demands, as classification lists were earlier approved, we find force in the same. However, since demands are not found to be sustained on merits, no detailed findings on these aspects are required to be arrived. There is no cause & case for penalties, interest etc.
4. In view of the findings, the orders of the lower authority are required to be set aside.
5. The appeals are to be allowed with direction of eligibility to notification 56/95, S No. 31 of the Table with consequent rely.