Full Judgment
3. The appellants are engaged in the manufacture of moulds and moulding equipments classifiable under Heading 84.80 of the CETA for supply to another factory M/s. Mohan Crystal and Glass Works, who are manufacturing glass and glasswares. They had been claiming exemption from payment of duty in respect of moulds and moulding equipments under Notification No. 281/86, dated 24-4-1986 but in fact, they were not entitled to the same. Accordingly, show cause notice dated 27-4-1993 was issued to them alleging that the moulds and moulding equipments manufactured by them were excisable goods and were also not meant for repair and maintenance of any machinery installed in their factory. It was also alleged in that notice that they willfully misstated and suppressed the true facts from the Revenue department and contravened the provisions of Rule 9(i) of the Central Excise Rules as they cleared the dutiable goods without payment of duty. They were called upon to pay the duty amount of Rs. 57,282/- in respect of the goods cleared by them during the period April 1988 to 7-2-1990. Earlier to that another show cause notice dated 30-1-1990 on these very facts was also issued to them by the Additional Collector for recovery of the duty amount of Rs. 3,54,794.51 under proviso to Section 11A of the Central Excises Act for the clearance of the goods without payment of duty during the period 1986-87 to August 1989. The appellants, however, contested both those notices and maintained that they were entitled to the benefit of Notification No. 281/86 as moulds and moulding equipments were covered by the same and were used by their sister concern for repair and maintenance of the glass manufacturing machinery. They denied of having misstated or suppressed the facts from the Revenue Department.
4. The Collector, however, did not agree with their contention and confirmed the duty amount in all of Rs. 412,076/- which was raised through two show cause notices referred above, and also imposed penalty of Rs. 1.50 lakhs on the appellants.
5. The learned counsel for the appellants has contended that since the goods, i.e. moulds and moulding equipments had been manufactured by the appellants in their factory for their captive use for the repair and maintenance of the machinery meant for production of the final products, glass and glasswares, were entitled to the benefit of exemption Notification No. 281/86 and that the Collector had wrongly and illegally disallowed the same. Therefore, his order deserves to be set aside.
6. On the other hand, the JDR while refuting this contention of the counsel, has argued that no benefit of the Notification in question could be claimed by the appellants as they did not use the moulds and moulding equipments for their captive use and even otherwise the moulds and moulding equipments could not be said to be meant for repair or maintenance of the machinery installed in their factory for production of glass and glasswares. Therefore, the impugned order of the Collector is perfectly valid.
8. Before referring to the facts, it would be beneficial to reproduce the Notification No. 281/86, dated 24-4-1986 the benefit of which had been sought by the appellants for non-payment of duty for the disputed period on the excisable goods i.e. moulds and moulding equipments manufactured by them. The said notification reads as under: "Exemption to all excisable goods produced and used within the same factory or other factory of same manufacturer for repairs or maintenance of machinery. - In exercise of the powers conferred by Sub-rule (1) of the Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts all excisable goods manufactured in a workshop within a factory and intended for use in the said factory or in any other factory of the same manufacturer, for repairs or maintenance of machinery installed therein, from the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986): Provided that where such use is in a factory of a manufacturer, different from his factory where the goods have been manufactured, the exemption contained in this notification shall be allowable subject to the observance of the procedure set out in Chapter X of the Central Excise Rules, 1944." This notification, as its perusal shows, exempted all excisable goods manufactured in a workshop within a factory and intended for use in the said factory or in any other factory of the same manufacturer for repairs or maintenance of the machinery installed therein, from the whole of the duty. In the instant case, the facts are not much in dispute. The appellants are M/s. Mohan Engineering Works and are engaged in the manufacture of moulds and moulding equipments. They themselves did not captively use these goods for production of any other final product. They, admittedly, supplied these goods to M/s Mohan Crystal and Glass Works, Mohan Nagar, Ghaziabad for enabling them to use the same in the manufacture of glass and glassware. There is no material on the record to show that M/s. Mohan Crystal Glass Works was a sister concern of the appellants at that time. Both these units were situated at a distance from each other and had separate Central Excise licences for production of the different goods. The perusal of the impugned order also shows that the Collector himself even visited the premises of both these units and found that the unit of the appellants was a full-fledged factory and not a workshop for the manufacture of excisable goods only for repair and maintenance. The moulds and moulding equipments were not found to be used by them captively within their factory premises. That being so, the exemption Notification No.281/86 referred to above, did not apply to the appellants.
9. However, even if it was accepted that the appellants and M/s Mohan Crystal & Glass Works were one and the same unit, still the benefit of above referred notification, could not be legally claimed by them as the moulds and equipments could not be said to be the goods which were intended for repair and maintenance of the machinery installed in the factory premises. The moulds and moulding equipments could not by any stretch of imagination, be taken to be the integral part and parcel of the machinery installed in the factory premises of M/s Mohan Crystal & Glass Works to whom these were supplied for the manufacture of glass and glasswares. These being complete appliances or apparatus had been used by M/s Mohan Crystal and Glass Works for preparing different varieties or designs of glasses and could not be termed as a part of machine or machinery with the aid of which those glasses were manufactured or prepared. The Collector before passing the order visited the factory premises and after examining the working of both the units one of the appellants and other of M/s Mohan Crystal & Glass Works had given detailed reasons in the impugned order for declining the benefit of exemption Notification No. 281 /86 to the appellants.
10. In the light of the facts and circumstances referred to above, we also do not find any sufficient ground to disagree with his findings that the two conditions laid down in the exemption notification in question i.e. (i) all the excisable goods manufactured in a workshop within the factory must be intended for use in the said factory or in any other factory of the same manufacturer (ii) those goods must be intended for use for repairs or maintenance of the machinery installed therein, were not satisfied in the case of the appellants. The moulds and moulding equipments are not found to be used by them captively in their factory and that too for repair or maintenance of the machinery installed therein. These also could neither be said to be intended for use for repairs or the maintenance of the machinery installed for manufacturing glass and glasswares, not termed as parts of that machinery.Purshuram Iron & Steel Rolling Mills (P) Ltd. v. CCE, Pune, 1997 (89) E.L.T. 535 (T) referred by the learned counsel is not attracted to the facts of the present case. In that case the machined rolls manufactured in the factory for captive consumption were held to be entitled to the benefit of exemption Notification 286/86. But in the case in hand as observed above, the appellants did not use the moulds and moulding equipments for captive consumption in their own factory premises. Moreover, these also could not be said to be meant for the repairs or maintenance of the machinery installed for manufacturing the glass and glasswares. These were in the form of dyes for manufacturing different sizes and variety of glasses and could not be said to be integral part and parcel of the glass manufacturing machines.
12. In view of the discussion made above, the benefit of exemption Notification No. 281/86 referred to above, had been rightly denied to the appellants by the Collector. The impugned order passed by him confirming the duty demand of both the show causes notices in all of Rs. 4,12,076/- and imposing penalty of Rs. 1.50 lakhs on the appellants for having cleared the goods during the disputed period, detailed above without payment of duty by suppressing the true facts, is perfectly valid and no interference is called for.
13. Resultantly, there is no merit in the appeal of the appellants and the same is ordered to be dismissed.