1996 (6) TMI 169 - AT - Central Excise

Summary

Issues:
1. Whether duty is payable on sand mix used in the manufacture of sand mould which is exempt under Notification No. 217/86.

Detailed Analysis:

Issue 1:
The dispute in this case revolves around the classification of sand mix used in the manufacture of sand moulds, which are further utilized in the production of steel castings. The appellants contended that the sand mix, being an essential input in the manufacturing process of steel castings, should be considered exempt under Notification No. 217/86. On the other hand, the Department argued that sand mix is a standalone product and cannot be deemed exempt merely because it is used in the production of sand moulds, which are exempt.

The learned Advocate representing the appellants emphasized that the sand mix is specifically utilized in the production of sand moulds, which, in turn, play a crucial role in the manufacturing of steel castings. He relied on a precedent set by a Larger Bench of the Tribunal in the case of Shri Ramakrishna Steel Industries Ltd. v. C.C.E., Madras, which clarified the concept of "used in relation to the manufacture." The Tribunal in the cited case highlighted that inputs directly involved in the manufacturing process of the final product qualify as exempt. Therefore, the sand mix, being an integral part of the manufacturing chain leading to steel castings, should be considered exempt under Notification No. 217/86.

Upon considering the arguments presented by both sides, the Tribunal referred to the precedent set by the Larger Bench and concluded that the sand mix, being a crucial component in the production of sand moulds, which are indispensable in the manufacturing of steel castings, qualifies as an input in the manufacturing process. Consequently, the Tribunal ruled in favor of the appellants, holding that the sand mix is exempt under Notification No. 217/86. The Tribunal deemed it unnecessary to delve into the aspect of marketability, given the primary finding regarding the exemption status of the sand mix.

In conclusion, the Tribunal overturned the order of the lower authorities and allowed the appeal, recognizing the sand mix as an exempt input in the manufacturing process of steel castings under Notification No. 217/86.

This detailed analysis encapsulates the key legal arguments, the application of relevant precedents, and the ultimate decision rendered by the Tribunal regarding the exemption status of the sand mix in question.