1996 (3) TMI 306 - AT - Central Excise

Summary

Issues:
- Eligibility for exemption under Notification No. 51/93-C.E. against Serial No. 20 for machinery used in electroplating.
- Interpretation of whether electroplating machines are used for the production of a commodity.
- Application of judicial pronouncements on electroplating in determining eligibility for concessional rate.
- Consideration of whether electroplating machines are used in the service industry or for production of goods.
- Strict construction of the wording in the notification for exemption eligibility.

Analysis:

The appeal before the Appellate Tribunal CEGAT, Mumbai involved a dispute regarding the eligibility for exemption under Notification No. 51/93-C.E. against Serial No. 20 for machinery used in electroplating. The appellants, engaged in manufacturing machines for electroplating, claimed the benefit of exemption under the notification. The lower authorities had rejected the appeal, stating that electroplating machines are not used for the production of a commodity, based on judicial pronouncements that electroplating does not amount to manufacturing a new commodity subject to further levy.

The appellant's advocate argued that electroplating machines could be used in the production line for manufacturing goods and should be considered machinery used in the production of a commodity. He distinguished electroplating machines from items used in the service industry, emphasizing that electroplating can be part of the manufacturing process. The advocate also relied on a judgment of Bajaj Auto Ltd. to support the appellant's position.

After considering the arguments from both sides, the Tribunal found that electroplating activity can be conducted independently, providing services for new and old items. The Tribunal disagreed with the appellant's argument that electroplating machines are solely for production purposes, stating that the exemption under the notification applies only to machines capable of producing a commodity. The Tribunal emphasized that the wording in the notification must be strictly construed at the entry stage of exemption eligibility.

The Tribunal also referred to a Supreme Court decision, highlighting the need for strict interpretation of the notification's wording. It concluded that electroplating machines, by themselves, cannot produce a commodity and upheld the findings of the lower authorities, rejecting the appeal. The Tribunal clarified that the exemption is for machines used in the production of a commodity, not for machines used in or related to production activities.

In summary, the Tribunal upheld the lower authorities' decision, emphasizing that electroplating machines do not qualify for the concessional rate under the notification as they are not considered machinery used in the production of a commodity.