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TMI Blog1996 (3) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... ny licence to manufacture or they were not required to pay duty as the manufacture was on the experimental basis. The appellants also assembled erected machinery after acquiring some parts on payment of duty from the market. The contention of the appellants was that since the items were embedded to the ground they were not goods. The Department however, alleged that in so far as the manufacture of varnishes is concerned, even experimental manufacture is not exempted from the requirement of Central Excise Rules and stipulations of the Central Excise Act and that appellants were required to pay the Central Excise Duty to obtain Central Excise licence and to maintain all the records necessary for Central Excise purposes. On the question of pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the old machines in place of worn out items and they were entitled to exemption under Notification No. 118/75. The appellants have also contended that they did not manufacture the entire machinery and therefore, the question of payment of duty etc. did not arise. 5. Shri P.K. Jain, the learned SDR appearing for the respondent Collector submits that so far as varnish is concerned, the appellants have admitted that what they were manufacturing was varnish; that varnish is an item specified in the Central Excise Tariff Schedule as dutiable. He submitted that there is no exemption whatsoever if varnish is manufactured on experimental basis or a small quantity. He submitted that the Collector, Central Excise, in his order-in-original has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termination before us are as under : (i) whether manufacture of varnish even on experimental basis or a small quantity was exempted from the requirement of Central Excise Act and Rules made therein; (ii) whether the assemble of bought out items and some parts fabricated and then assembled in the factory amounts to manufacture and if yes, then whether duty was payable on such assembled machinery and (iii) whether in the circumstances of the case, penalty was warranted. 8. Insofar as varnish is concerned, we find that the appellants had imported certain ingredients and had after processing these ingredients obtained varnish. Varnish is a distinct item and was used internally (captively) by the appellants. The contention of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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