1988 (4) TMI 294 - AT - Central Excise

Summary

Issues:
- Determination of whether Electrolytic Cells manufactured by the appellants constitute "complete machinery" for the purpose of Central Excise Notification No. 118/75-C.E., dated 30-4-1975.

Detailed Analysis:

The appeal before the Appellate Tribunal CEGAT, New Delhi, involved the question of whether Electrolytic Cells manufactured by the appellants constituted "complete machinery" for the purposes of a specific Central Excise Notification. The issue arose from an order-in-appeal passed by the Collector of Central Excise (Appeals), New Delhi. The central question was whether the appellants were rightly denied duty exemption under the said notification due to the classification of the Electrolytic Cells as "complete machinery" as per the second proviso of the notification. The lower authorities had denied the benefit of duty exemption and imposed penalties on the appellants, leading to the appeal.

During the proceedings, the definition of "machine" was considered, as provided in various dictionaries. While the Electrolytic Cells in question were meant to produce Hydrogen Gas, the Tribunal noted that for something to be considered "complete machinery," it would require additional components beyond just the cells themselves, such as connecting pipelines or storage tanks for transport and storage of the produced gas. Since these additional components were not manufactured by the appellants in this case, the Tribunal concluded that even if the cells could be seen as machines for hydrogen gas production, they did not constitute "complete machinery" as required by the notification. Therefore, the denial of duty exemption was deemed incorrect.

The Tribunal further emphasized that if the goods were entitled to exemption, as determined, the punitive actions taken against the appellants, such as confiscation of goods and imposition of penalties, were unwarranted. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants, granting them consequential relief. This decision was based on the finding that the Electrolytic Cells did not meet the criteria to be classified as "complete machinery" under the relevant excise notification, thereby entitling the appellants to the benefit of duty exemption.