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TMI Blog1986 (12) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... Jigmil. The machines were valued at Rs. 2,04,773.10 and Rs. 10,45,350/- respectively. The two machines were not entered in the excise records of the appellants and no duty was paid on them. The Excise authorities demanded duty on the machines on the ground that they were complete working units, capable of use in the production or processing of goods. The appellants however claimed that the machines were entitled to the benefit of exemption Notification No. 118/75 dated 30-4-1975, on the ground that they were made out of defective components and kept only as show pieces and for the purpose of training. This plea was not accepted by the Assistant Collector, who confirmed the demands for excise duty of Rs. 10,238.65 and Rs. 83,628.00 respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonnel. They were also used for the purpose of discussions with prospective customers. Since the machines were mere assemblies of rejected components they could not be certified as complete machines which could be used in the assembly line. Shri Ramabadran submitted that the machines were not meant for producing or processing any goods . Accordingly they were not hit by the proviso which has been reproduced above. 4. Shri Ramabadran filed copies of the two types of machines in question, for the better understanding of the Bench. These were taken on record, with the qualification that they should not be taken as representing the individual machines which are the subject matter of these appeals. 5. In the Assistant Collector s orders, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... control requirements. 8. Smt. Zutshi submitted that it was well established that goods did not cease to be excisable because they were sub-standard. As regards the submission of the appellants that these machines were not used in the production or processing of any goods, Smt. Zutshi submitted that the position was clear from the submissions of the appellants themselves. It had been admitted that the machines were being used for the purpose of training their factory personnel. This clearly implied that there would be some production from the machine, as otherwise the training would be ineffective. 9. The appellants had made the point that the machines could not be marketed. However, in a case of captive consumption, the question of ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d goods. They have been laying stress on their argument that the machines were made from rejected -parts and that they should be valued as scrap. They have also stressed that the machines are not marketable. In view of the submission of the appellants themselves that the machines are being used as prototype units to carry out the tests mentioned by the collaborator, and that the machines are used as a training ground for the factory personnel to refine their techniques and carry out experiments with new procedures without fear of damaging a good machine, it is clear that the two machines were functionally complete and operative, though in the view of the appellants they were sub-standard. As pointed out by the learned SDR, neither this fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete machinery ..........meant for producing or processing any goods". If they are considered as individual articles, we have to deal with the submission of Shri Ramabadran that these particular machines were not meant for use in producing or processing any goods. Even here the appellants would have a difficulty, because it could be said that the primary use of the machines was for producing or processing (allegedly defective) goods; and it was this that gave them their secondary use for purposes of training and research. 16. However, on a careful consideration of the notification, we are of the view that we should go by the class of machines rather than the individual machines. Reading Notification No. 118/75, it appears that a broad di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or processing any goods ). 17. We do not think it could be the intention that the grant of exemption should depend only on the professed intention of the manufacturer at the time the manufacture is completed (in these cases there may not be a physical removal from the factory), leaving him free to change his mind later and use the machines in the assembly line. If this possibility, which would clearly defeat the purpose of the exemption, is taken into account, the exemption would have to be considered as a conditional one to be allowed only so long as the machine is not used for production or processing. There is however no indication in the notification that it is meant to be conditional. 18. We are accordingly of the view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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