1993 (12) TMI 130 - AT - Central Excise

Summary

Issues:
Manufacture of M.S. rolls, Captive consumption, Exemption under Notification No. 281/86, Interpretation of Tribunal's decision, Definition of 'appliance', Applicability of Harmonised System (HSN)

Manufacture of M.S. rolls:
The appellants were engaged in manufacturing M.S. Structural and other rolled products in their Rolling plants. They also machined and grooved rough unmachined rolls for captive use as replacements in Rolling Mill. Central Excise Officers alleged that this process amounted to manufacturing M.S. rolls under sub-heading 8455.00. The appellants argued that the process did not constitute manufacturing and, even if it did, they should be exempt under Notification No. 281/86 as M.S. rolls were essential parts of the Rolling Mill.

Captive consumption:
The show cause notices also accused the appellants of captively consuming the M.S. rolls without maintaining proper records or discharging duty liability. The Collector upheld these allegations and confirmed the duty demands and penalties on the appellants.

Exemption under Notification No. 281/86:
The appellants sought exemption under Notification No. 281/86, citing a Tribunal decision in a similar case. They argued that the grooved M.S. rolls produced by them from rough unmachined rolls for captive consumption in the factory should be exempt from duty under this notification.

Interpretation of Tribunal's decision:
The respondent contended that the Tribunal's decision in a related case should not be considered a precedent as it failed to recognize that M.S. rolls could not be used for repair or maintenance of Rolling Mill, as per the Central Excise Tariff.

Definition of 'appliance':
The respondent argued that M.S. rolls should be considered appliances or machines, not parts of Rolling Mill, and thus not eligible for exemption under Notification No. 281/86. Reference was made to the Judicial Dictionary by K.T. Aryer to support this interpretation.

Applicability of Harmonised System (HSN):
The Tribunal analyzed the HSN notes on Rolling Mills and rolls to determine whether a Rolling Mill is a single machine and whether rolls can be considered parts of Rolling Mills. The discussion emphasized the nature and function of Rolling Mills and the parts involved.

Conclusion:
The Tribunal held that the M.S. rolls manufactured by the appellants from rough or unmachined rolls for maintenance and repair of Rolling Mills were eligible for the benefit of Notification No. 281/86. The appeals were allowed in favor of the appellants, providing them with consequential relief.