Lakshmi Automatic Looms Works Vs. Commr. of C. Ex. - Court Judgment

Excerpt:
1. in this appeal filed by m/s. lakshmi automatic looms works ltd., the collector of central excise (appeals) had held as under :- "i have examined the appeal papers. the first point for consideration is whether parts and components captively used in the manufacture of looms which are subsequently cleared to 100% eous without payment of duty prior to 1-3-92 i.e. issue of notification no. 33/92 would be eligible for exemption under notification 237/86 ce dated 2-4-86. as per this notification, prior to 1-3-92, the exemption was available for captively consumed parts only if the final products was chargeable to duty of excise. there was no provision either explicitly or by implication to the effect that the benefit of the notification would be available even if the final product is exempted. shaw wallace case cited by the appellants, dealt with notification 157/76-cus. dated 2-8-76 which exempted furnace oil supplied to coastal vessels as bunker. the amending notification no. 295/87, dated 13-8-87 inserted an expression giving the exemption to the furnace oil retained on-board the vessel at the time of its reversion from foreign run to coastal run and consumed in coastal run. thus, the amending notification extended the exemption to the retained furnace oil consumed during coastal run within the spirit of the parent notification. in the present case, the benefit of notification 217/86 has been specifically given to these goods used in the final product which are cleared on payment of duty. this benefit has been incorporated for goods cleared to free trade zone or 100% eous only with effect from 1-3-92 and was never contemplated in the parent notification prior to the amendment made vide notification 33/92. thus, shaw wallace case cited by the appellants would not help them and the effect of the amending notification no. 33/92 cannot be extended retrospectively. the appellants have stated that in terms of tribunal's decision in the case of premier tyres, there is no one to one correlation between the input and the final product and hence they would be eligible to the exemption under notification 217/86 even if the goods have been consumed in the exempted final product. this contention is not acceptable, in as much as the premier tyres case has dealt with the issue of modvat credit availability to inputs used in the manufacture of final products which are exempted from payment of duty of excise. here, the wordings of the notification no. 217/86 are quite specific, in as much as the goods captively consumed would not be exempted from payment of duty, if the final products are chargeable to nil rate of duty. thus the assistant collector is correct in holding the captively consumed goods, used in the manufacture of final product cleared to 100% eous, as ineligible to exemption under notification 217/86 ibid".2. when the matter was called, no one appeared for the appellant. shri s. kannan, ld. dr submitted that the matter was already covered by the larger bench decision of the tribunal in the case of l & t ltd. v.collector of central excise mumbai [2000 (119) e.l.t. 51 (tribunal - lb)].3. the notices for hearing had been sent to the appellants as well as to their counsel on record. there is no response. this is an old matter in which the period involved is from 26-4-90 to 22-8-90. appellants have prayed for adjournment on the ground that their consultant has gone to mumbai on some personal work. we are not satisfied with the request for adjournment and reject the same. as the matter is very old and as according to ld. dr, it is already covered by the larger bench decision, we proceed to deal with the matter on merits after hearing the departmental representative.4. the operative part of impugned order-in-appeal has already been extracted above. the collector of central excise (appeals) with regard to plea of marketability had correctly held that as the parts of looms were sold as replacement parts, the criteria of marketability was satisfied in this case.5. with regard to the valuation, the ld. collector (appeals) had agreed with the contention of the assessee that the value of the parts of automatic looms could not be arrived at by deducting the value of the bought out parts from the total assessable value of the looms. the value of the parts had to be determined afresh. he had set aside that part of the order which related to the valuation and had remanded the matter to the assistant collector (now assistant commissioner) to redecide the assessable value of the parts and components in terms of valuation rules. the appellants cannot have any grievance against this part of the order. taking into account the order recorded by the appellate authority and the submissions made by the dr, we do not find any merit in this appeal and the same is dismissed by following the ratio of larger bench decision in the case cited above.

Judgment:
1. In this appeal filed by M/s. Lakshmi Automatic Looms Works Ltd., the Collector of Central Excise (Appeals) had held as under :- "I have examined the appeal papers. The first point for consideration is whether parts and components captively used in the manufacture of looms which are subsequently cleared to 100% EOUs without payment of duty prior to 1-3-92 i.e. issue of Notification No. 33/92 would be eligible for exemption under Notification 237/86 CE dated 2-4-86. As per this notification, prior to 1-3-92, the exemption was available for captively consumed parts only if the final products was chargeable to duty of excise. There was no provision either explicitly or by implication to the effect that the benefit of the notification would be available even if the final product is exempted. Shaw Wallace case cited by the appellants, dealt with Notification 157/76-Cus. dated 2-8-76 which exempted Furnace oil supplied to Coastal vessels as bunker. The amending Notification No. 295/87, dated 13-8-87 inserted an expression giving the exemption to the Furnace oil retained on-board the vessel at the time of its reversion from foreign run to coastal run and consumed in coastal run. Thus, the amending notification extended the exemption to the retained Furnace oil consumed during coastal run within the spirit of the parent notification. In the present case, the benefit of Notification 217/86 has been specifically given to these goods used in the final product which are cleared on payment of duty. This benefit has been incorporated for goods cleared to free trade zone or 100% EOUs only with effect from 1-3-92 and was never contemplated in the parent notification prior to the amendment made vide Notification 33/92. Thus, Shaw Wallace case cited by the appellants would not help them and the effect of the amending Notification No. 33/92 cannot be extended retrospectively.

The appellants have stated that in terms of Tribunal's decision in the case of Premier Tyres, there is no one to one correlation between the input and the final product and hence they would be eligible to the exemption under Notification 217/86 even if the goods have been consumed in the exempted final product. This contention is not acceptable, in as much as the Premier Tyres case has dealt with the issue of Modvat credit availability to inputs used in the manufacture of final products which are exempted from payment of duty of excise. Here, the wordings of the Notification No. 217/86 are quite specific, in as much as the goods captively consumed would not be exempted from payment of duty, if the final products are chargeable to nil rate of duty. Thus the Assistant Collector is correct in holding the captively consumed goods, used in the manufacture of final product cleared to 100% EOUs, as ineligible to exemption under Notification 217/86 ibid".

2. When the matter was called, no one appeared for the appellant. Shri S. Kannan, Ld. DR submitted that the matter was already covered by the Larger Bench decision of the Tribunal in the case of L & T Ltd. v.Collector of Central Excise Mumbai [2000 (119) E.L.T. 51 (Tribunal - LB)].

3. The notices for hearing had been sent to the appellants as well as to their counsel on record. There is no response. This is an old matter in which the period involved is from 26-4-90 to 22-8-90. Appellants have prayed for adjournment on the ground that their consultant has gone to Mumbai on some personal work. We are not satisfied with the request for adjournment and reject the same. As the matter is very old and as according to Ld. DR, it is already covered by the Larger Bench decision, we proceed to deal with the matter on merits after hearing the departmental representative.

4. The operative part of impugned Order-in-Appeal has already been extracted above. The Collector of Central Excise (Appeals) with regard to plea of marketability had correctly held that as the parts of looms were sold as replacement parts, the criteria of marketability was satisfied in this case.

5. With regard to the valuation, the Ld. Collector (Appeals) had agreed with the contention of the assessee that the value of the parts of automatic looms could not be arrived at by deducting the value of the bought out parts from the total assessable value of the looms. The value of the parts had to be determined afresh. He had set aside that part of the order which related to the valuation and had remanded the matter to the Assistant Collector (now Assistant Commissioner) to redecide the assessable value of the parts and components in terms of valuation rules. The appellants cannot have any grievance against this part of the order. Taking into account the order recorded by the Appellate authority and the submissions made by the DR, we do not find any merit in this appeal and the same is dismissed by following the ratio of Larger Bench decision in the case cited above.