Punjab Khand Udyog Ltd. Vs. Collector of C. Ex. - Court Judgment

Excerpt:
1. the assessees manufactured sugar. they had a carpentry shop in their factory wherein they manufactured doors and window frames as well as articles of furniture. duty was demanded and confirmed on these articles as falling under tariff item 68. the assistant collector while doing so rejected the claim of the assessees that benefit of notification no. 118/75 was available to such products. he also rejected the plea that the goods were handicrafts and thus covered under notification no. 234/82 or 281/86. in their appeal before the collector, along with these points the assessees also claimed that since the goods were manufactured without the aid of power, the benefit of another notification no. 179/77 was also available. the collector rejected the last claim saying that since it was a question of fact, it could not be taken at the stage of appeal. the collector upheld the lower order but reduced the penalty. this order dealt with two appeals filed by the assessees before him. since the issues are common in both the appeals before us, we deal with the two appeals in this single order.2. we have heard ms. ginny bedi for the assessees and shri r.s. sangia, ld. jdr for the revenue.3. notification 118/75 exempted goods falling under tariff item 68 when manufactured in a factory and intended for use in the factory in which they were manufactured. the notification excluded only complete machinery manufactured in the factory from the coverage thereof. the notification does not limit the benefit by specifying end use for the input. in other words it is not necessary that the product be used in further manufacture of any other product. we have seen the judgment of the supreme court in the case of east india transformers and switch gear (pvt.) ltd. reported at 1997 (20) rlt 927 (s.c.) relied upon by the ld. advocate. in this case, the assessee was manufacturing dutiable parts of transformers and using them for repairing the used transformers in the same factory. the tribunal held that while the activity of repairing transformers did not amount to manufacture, duty was payable on the excisable components manufactured in the same factory. the supreme court did not uphold this belief of the tribunal and ruled that under the notification the benefit of duty free clearance was available to the party. on perusal of the language of the notification as also the interpretation made by the supreme court thereof, it is clear that the benefit of this notification was available to the goods manufactured by the assessees. we, therefore, set aside the impugned orders, allow the appeals and direct consequential relief to the extent permissible.

Judgment:
1. The assessees manufactured sugar. They had a carpentry shop in their factory wherein they manufactured doors and window frames as well as articles of furniture. Duty was demanded and confirmed on these articles as falling under Tariff Item 68. The Assistant Collector while doing so rejected the claim of the assessees that benefit of Notification No. 118/75 was available to such products. He also rejected the plea that the goods were handicrafts and thus covered under Notification No. 234/82 or 281/86. In their appeal before the Collector, along with these points the assessees also claimed that since the goods were manufactured without the aid of power, the benefit of another Notification No. 179/77 was also available. The Collector rejected the last claim saying that since it was a question of fact, it could not be taken at the stage of appeal. The Collector upheld the lower order but reduced the penalty. This order dealt with two appeals filed by the assessees before him. Since the issues are common in both the appeals before us, we deal with the two appeals in this single order.

2. We have heard Ms. Ginny Bedi for the assessees and Shri R.S. Sangia, ld. JDR for the Revenue.

3. Notification 118/75 exempted goods falling under Tariff Item 68 when manufactured in a factory and intended for use in the factory in which they were manufactured. The notification excluded only complete machinery manufactured in the factory from the coverage thereof. The notification does not limit the benefit by specifying end use for the input. In other words it is not necessary that the product be used in further manufacture of any other product. We have seen the judgment of the Supreme Court in the case of East India Transformers and Switch Gear (Pvt.) Ltd. reported at 1997 (20) RLT 927 (S.C.) relied upon by the ld. Advocate. In this case, the assessee was manufacturing dutiable parts of transformers and using them for repairing the used transformers in the same factory. The Tribunal held that while the activity of repairing transformers did not amount to manufacture, duty was payable on the excisable components manufactured in the same factory. The Supreme Court did not uphold this belief of the Tribunal and ruled that under the notification the benefit of duty free clearance was available to the party. On perusal of the language of the notification as also the interpretation made by the Supreme Court thereof, it is clear that the benefit of this notification was available to the goods manufactured by the assessees. We, therefore, set aside the impugned orders, allow the appeals and direct consequential relief to the extent permissible.