1999 (6) TMI 297 - AT - Central Excise

Rolling - not entitled to benefit of Notification No. 281/86-C.E. - Interpretation of Statutes

Summary

Issues Involved:
1. Whether the benefit of Notification No. 281/86, dated 24-4-1986, is available to parts of loco wagon and rolling stock manufactured by the appellants.

Detailed Analysis:

1. Context and Background:
The appellants manufactured parts of loco, wagon, and rolling stock, including axles, wheels, wheelsets, hoops, hubs, frames, break gears, hooks, and couplings. They claimed exemption from duty under Notification No. 281/86-C.E., dated 24-4-1986, which exempts excisable goods manufactured in a workshop and intended for use in the repair and maintenance of machinery installed in the manufacturer's factory. The Assistant Collector denied this benefit, stating that loco wagons and rolling stock are classified under Chapter 86 of the Central Excise Tariff Act and are not considered machinery. Additionally, these goods cannot be installed within the factory due to their operational nature. The Collector (Appeals) upheld this decision, asserting that the impugned products cannot be regarded as machinery used for maintenance of plant and machinery, which are generally fixed to the earth.

2. Appellant's Arguments:
The appellants, represented by Shri Ravinder Narain, argued that Notification No. 281/86 exempts excisable products used for repairs and maintenance of machinery without distinguishing between locomotive or other machinery. They contended that trucks and other transport equipment are machinery, and parts for their maintenance should qualify for exemption if used within the factory. They cited definitions from Stroud's Judicial Dictionary and Law Lexicon, emphasizing that machinery includes mechanical contrivances generating power or modifying industrial forces, and that locomotives fall under this definition. They referred to the Bombay High Court's decision in N.K. Kapur v. Kirloskar Cummins Ltd., which classified locomotive engines as machinery. They also cited the Supreme Court's definition of machinery in C.I.T. v. Mir Mohammad Ali and the Gujarat High Court's decision in Patel Plastics v. U.O.I., supporting their view that vehicles and transport equipment are considered machinery.

3. Definition and Installation of Machinery:
The appellants argued that the term 'installation' does not necessarily mean embedding to the earth but can refer to placing machinery in position for use or service. They cited definitions from Black's Law Dictionary and the Shorter Oxford English Dictionary, asserting that installation includes setting up machinery for service or use, even if not fixed permanently. They referenced the Madras High Court's decision in C.I.T., Madras v. Sri Ram Vilas Service (Pvt.) Ltd., which held that buses and lorries come within the scope of 'plant' and that installation means placing machinery in position for use. They also cited the Supreme Court's decision in C.I.T. v. Mir Mohammad Ali, which held that installation includes induction or introduction of machinery for service. They contended that trucks and locomotives used within the factory are essential for production and should be considered installed machinery.

4. Respondent's Arguments:
Shri S. Nunthuk, representing the respondent, reiterated the findings of the Adjudicating Authority and argued that Notification No. 281/86 applies to machinery fixed for specific purposes, not to moving machinery. He contended that decisions under the Income-tax Act may not be applicable to the Central Excise Act and Notifications due to different provisions.

5. Tribunal's Findings:
The Tribunal considered the submissions and reviewed Notification No. 281/86-C.E., which exempts excisable goods manufactured in a workshop within a factory and intended for use in the factory or another factory of the same manufacturer for the repair or maintenance of machinery installed therein. The Tribunal noted that the benefit of this notification requires that the goods are manufactured in a workshop within a factory, intended for use in the factory or another factory of the same manufacturer, intended for repair or maintenance of machinery installed therein, and follow Chapter X procedure if used in a different factory. The Tribunal referred to its previous decision in the appellants' own case, where it was held that locomotives and rolling stock are not installed machinery as they are moving items. The Tribunal emphasized that the notification applies to machinery installed in the factory, not to machinery used in the factory. They concluded that the legislature's intention was not to extend the benefit to all machinery used in the factory, and an exemption notification must be construed strictly.

6. Conclusion:
The Tribunal upheld the decision of the lower authorities, holding that the benefit of Notification No. 281/86 is not available to the appellants. The appeal was dismissed, affirming that the notification applies to machinery installed in the factory and not to moving machinery used within the factory.