1984 (6) TMI 252 - AT - Central Excise

Summary

Issues:
1. Correctness of Order-in-appeal regarding duty on Rotors & Stators
2. Interpretation of Rules 9 and 49 of the Central Excise Rules
3. Classification of Rotors and Stators under Tariff Item 30-D
4. Captive consumption and duty liability on Electric Motors
5. Authority of the Tribunal to allow new grounds in appeal

Analysis:
1. The appeal before the Appellate Tribunal CEGAT, New Delhi, involved the correctness of an Order-in-appeal regarding the duty liability on Rotors and Stators used in the manufacture of P.D. Pumps. The Appellate Collector had held that these components were captively consumed and not chargeable to Central Excise duty separately but only on the P.D. Pump as a whole.

2. The dispute centered around the interpretation of Rules 9 and 49 of the Central Excise Rules, 1944. The Appellate Collector had initially ruled in favor of the appellants based on these rules. However, subsequent retrospective amendments to the rules by Notification No. 20/82-C.E. introduced an explanation deeming captive consumption as removal from the place of manufacture, rendering the previous grounds for relief untenable.

3. The classification of Rotors and Stators under Tariff Item 30-D was contested by the Government of India, arguing that even if used captively in Monoblock Pump Sets, duty liability on Electric Motors or parts thereof still applied under the Central Excise Tariff. The respondents contended that these components were specially designed for P.D. Monoblock pump sets and not as parts of Electric Motors, supported by technical certificates and affidavits.

4. The issue of captive consumption and duty liability on Electric Motors was a key point of contention. The respondents argued that the Rotors and Stators were exclusively used in the manufacture of P.D. Monoblock pumps and not sold separately as parts of Electric Motors. They contended that the components should be excluded from Tariff Item 30 based on their specific design and usage, as supported by technical evidence.

5. The Tribunal deliberated on the authority to allow new grounds in appeal, with the appellants objecting to the respondents raising additional arguments beyond those presented before the Appellate Collector. However, the Tribunal acknowledged the wide powers granted to it in permitting new grounds to be raised, emphasizing the discretion to ensure justice between the parties. The matter was remanded to the Collector of Central Excise (Appeals) for a fresh decision based on the new grounds presented by the respondents and additional evidence to be considered.