1986 (8) TMI 192 - AT - Central Excise

Issues Involved:
1. Entitlement to exemption under Notification No. 179/77-CE.
2. Use of power in the manufacture of gas mantles.
3. Classification of ironing as a process incidental or ancillary to the completion of manufacture.

Detailed Analysis:

1. Entitlement to Exemption under Notification No. 179/77-CE:
The appellants, M/s. Fargo Mantle Products (Private) Limited, claimed exemption from payment of duty under Notification No. 179/77-CE for gas mantles classified under tariff item 68 CET. The Assistant Collector of Central Excise rejected this claim, stating that the appellants used electric power in various stages of the manufacturing process. The Appellate Collector of Central Excise upheld this decision, noting that the use of power in ironing was sufficient to deny the exemption. The appellants filed a revision petition, which is now treated as an appeal before the Tribunal.

2. Use of Power in the Manufacture of Gas Mantles:
The manufacturing process of gas mantles involves nine stages, with power being used in three stages: warping the nylon yarn beam, knitting the nylon hose, and ironing the mantles. The Appellate Collector concluded that the use of power in the initial stages (warping and knitting) did not disqualify the appellants from the exemption, as these stages were considered part of raw material preparation. However, the use of power in ironing was deemed incidental or ancillary to the completion of the manufacture, thus disqualifying the appellants from the exemption.

3. Classification of Ironing as a Process Incidental or Ancillary to the Completion of Manufacture:
The primary contention was whether ironing the gas mantles constituted a process incidental or ancillary to their manufacture. The appellants argued that ironing was merely for facilitating packing and not part of the manufacturing process. They cited several judicial precedents where packing was not considered part of the manufacturing process, even when it was necessary for marketability.

The Tribunal examined various judgments to determine the relevance of ironing in the manufacturing process. Notably:

- E.I.D. Parry Limited v. Union of India: Packing was not considered incidental to manufacturing.
- Union of India v. Mansingka Industries Pvt. Ltd.: Manufacturing was deemed complete without packing.
- Malwa Vanaspati and Chemical Co. Ltd. v. Union of India: Packing was not considered part of manufacturing.
- Orissa Industries Ltd. v. Union of India: Packing was not incidental to manufacturing.
- Alembic Glass Industries Ltd. v. Union of India: Packing was not part of manufacturing.
- Ogale Glass Works Ltd. v. Union of India: Packing was for convenience and not part of manufacturing.
- Bush (India) Ltd. v. Union of India: Additional processes for presentation did not alter the nature of the product.
- Assistant Collector of Central Excise v. Subramania Chettiar: Packing was essential for the product's use.
- Ramnugar Cane and Sugar Co. Ltd. v. Union of India: Packing was essential for making the product consumable.
- Union of India v. Tata Chemicals: Packing was for marketability but not part of manufacturing.
- Hindustan Lever Ltd. v. Collector of Central Excise: Normal packing was considered incidental to manufacturing.
- Metro Readywear Company v. Collector of Customs: Ironing was deemed necessary for marketability.

The Tribunal concluded that the process of ironing, although aiding in packing, was not essential to the manufacture of gas mantles. The mantles were complete and usable before ironing, and the process was solely for ease of packing and transport. Therefore, ironing did not constitute a process incidental or ancillary to the completion of manufacture, and the appellants were entitled to the exemption from the date they discontinued using power for drying.

Conclusion:
The Tribunal set aside the Appellate Collector's order to the extent that it denied the exemption due to ironing but maintained the denial for the period when drying was done with power. The appeal was allowed in these terms.

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