1986 (9) TMI 207 - AT - Central Excise

Summary

Issues:
1. Interpretation of exemption notifications for electric motors.
2. Determination of whether electric motors used in electric fans qualify for exemption.
3. Consideration of classification of electric motors as component parts of electric fans.
4. Evaluation of evidence and submissions regarding the manufacturing process of electric fans.
5. Comparison with relevant case law on exemption notifications.

Analysis:
The case involved a dispute over the applicability of exemption notifications for electric motors used in the manufacture of electric fans. The appellants, as manufacturers of electric motors, rotors, stators, and fans, claimed exemption under notification No. 28/69 for captive use of electric motors as component parts in fan production. Another notification, No. 68/60, partially exempted electric motors for home consumption, subject to output limits. The Department contended that the output of electric motors used in fans should be included in the total output calculation, affecting the appellants' exemption eligibility.

The appellants argued that the electric motors they produced for fans were not conventional motors but rotors and starters directly used in fan assembly. They presented a letter from an engineering college principal supporting their classification. However, the Department maintained that all types of electric motors were covered under the relevant tariff item and considered the assembly of rotors and starters for fan production as assembling electric motors. The Department rejected the college principal's letter as invalid.

The Tribunal analyzed the evidence and submissions, focusing on whether the appellants' assembly process constituted manufacturing electric motors. Despite the appellants' denial, the Tribunal found that electric motors were integral to fan production. The Tribunal highlighted the distinction between mechanical power measurement for motors and air displacement for fans but emphasized that electric motors were essential components of fans. The Tribunal dismissed the relevance of the college principal's letter and clarified that the issue was not about classifying fans but determining the status of electric motors as fan components.

Referring to a previous judgment, the Tribunal differentiated the current case from conflicts between exemption notifications. It affirmed that the relevant tariff item encompassed all types of electric motors, including those used in fan manufacturing. Consequently, the Tribunal rejected the appeal, upholding the Department's position on including electric motors in the total output calculation for exemption determination.

In conclusion, the Tribunal dismissed the appeal, affirming the Department's decision to include electric motors used in fan production in the total output calculation for exemption eligibility.