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TMI Blog2022 (6) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made by the learned Advocate that all machineries means set of machines working conjointly to produce the commodity does not merit consideration. If such an interpretation is placed then all plants with series of machineries would get exempted. If the interpretation as placed by the learned Advocate is accepted then in circumstances, where a factory carries out a single process alone with a individual single machinery would get exempted. Such interpretation would create chaos and unintended benefit would flow to all factories, when the legislature has not intended to grant the benefit to machines carrying out an individual function alone without production of a commodity. In the case of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS KARUNA ACQUA FARMS [ 1997 (8) TMI 304 - CEGAT, MADRAS] it was held that the learned CCE(A) has rightly allowed the benefit of the Notifications to the appellants. Appeal allowed - decided in favor of appellant. - Customs Appeal No. 85743 of 2013 - FINAL ORDER NO. A/85544/2022 - Dated:- 8-6-2022 - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) AND DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri M.P.S. Sengar, Consultant, for the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms, Bombay - 1997 (90) E.L.T. 307 (Tribunal) while denying exemption to the appellants. The learned counsel for the appellants states that the decision in the case of Collector of Customs, Bombay V/s United Electrical Industries Ltd. 1999 (108) E.L.T, 609 (S.C.) was not before the lower authorities and it is his claim that in the light of this decision the appellants are entitled to exemption in respect of the impugned machinery. 1.2 After perusal of the case records and cited case laws, we set aside the impugned orders passed by the lower authorities and remand the matter to the original authority to re-examine the question of eligibility of the impugned goods to exemption in the light of both the case laws cited above. Appeal is allowed by way of remand. 2.5 In the remand proceedings matter was adjudicated by the original authority stating as follows: I deny the benefit of Notification No 11/97 (Sr No 143) to Automatic Tapping Machine 1 No, Automatic Silicon Casting machine 1 No and Automatic Dipping Machine -2 No. 2.6 Appellant preferred an appeal before Commissioner (Appeals), which was rejected as per the impugned order referred in para 1, abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53/86 have similar words, whereas the wording of Notification No.118/80 is very specific with respect to functioning of machine. 10. The tribunal in the case of M/s Lakhanpal National Ltd. denied the benefit of Notification No.153/86 dtd. 01.3.1986 in respect of paste procuring machines, bobbin insertion machine and capping machine holding as under in Para 6 of the order: As can be seen from the above processes, the second process, fourth process and tenth process alone are carried out by the machines in question. These three machines carry out processes in between, do not bring out a commodity into existence. Various other machines are required for manufacturing the final product. Therefore, even by the appellants own contention, these three machines do not produce the commodity and hence the rejection of the benefit of the notification by the lower authorities is fully justified. 11. It is seen from the above discussion that to avail the benefit under Notification No.11/97 (Sr. No.143), the machinery should be capable of producing a commodity. In the instant case, viz. Automatic Taping machine and Automatic Silicon machine and Automatic Welding machine are havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the appellants had imported machinery known as Fermentor from Germany. The dispute initially arose about the classification of the same, as the appellants sought classification under CTH 8419.89, while the Department wanted to classify the same under CTH 8479.89. The dispute was resolved ultimately by the Tribunal in an appeal filed by the appellants against the order of the adjudicating authority who refused to accept the classification as propounded by them, by holding the classification under sub-heading 8479.89 of the CT vide Final Order dated 8-11-2002. The Tribunal, however, remanded the matter to the adjudicating authority for considering the eligibility of the machine Fermentor, to the benefit of Notification 16/2000-Cus. which provided duty at standard rate of 25% in respect of machinery for production of commodities falling under sub-heading 8479.50 or 8479.89. The adjudicating authority has denied the benefit of this Notification on the ground that the machine Fermentor imported by the appellants did not produce any commodity which could be bought and sold in the market as such as it produced vaccine in a crude form which required further purification and bottli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alone with a individual single machinery would get exempted. Such interpretation would create chaos and unintended benefit would flow to all factories, when the legislature has not intended to grant the benefit to machines carrying out an individual function alone without production of a commodity. The interpretations laid down by the Tribunal in the above cited judgment supports the view taken by the lower authorities that it is an individual machine, which produces a commodity which should get the benefit. However the phrase used in the notification 11/97-Cus at Sr No 143, is Machinery for production of commodity . The phrases used in the two notification are not identical. While interpreting the notification 153/86-Cus, tribunal has restricted the benefit of the notification to the single machine that would be used for producing commodity. However the said finding did not find the approval of the Hon ble Apex Court in case of United Electrical Industries Ltd. 1999 (108) E.L.T, 609 (S.C.), wherein Hon ble Apex Court held as follows: 5. For the Revenue reliance is placed on a decision of this Court in Collector of Customs, Bombay v. Perfect Machine Tools Co. Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is well settled which is also provided in Section 13 of the General Clauses Act, 1897 of the Central Acts that unless there is anything repugnant to the subject or context the word singular shall include plural and vice versa. The Tribunal interpreted the word `machine to be `machines and, in our opinion, rightly so. It seems by this restrictive interpretation the very purpose of this notification since completely diluted which led into clarification/ modification by the Government through the aforesaid letter. In the remand proceeding both the lower authorities have failed to consider these decisions in the right earnest and have proceeded to decide the matter by just following the decision of Lakhanpal. 4.6 During the course of argument lot of emphasis was placed by the authorized representative on the phrase production of commodity . In his view the machines as imported are not used in production of commodity, as the commodity is something which is marketable whereas the output of these machines is not a marketable. Explaining the phrase production of commodity tribunal has in case of Graver and Weil (I) Ltd. [2004 (174) E.L.T. 487 (Tri. Mumbai)] (c) It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CC v. Escorts - 1991 (54) E.L.T. 144 (Tri.) upheld by Apex Court [1997 (96) E.L.T. 504 (S.C.)] wherein a machine for cleaning of parts/components by ultrasound waves and thereby improving their function was held to be a machine designed for production of a commodity. Similarly in case of CC v. McDowell Co. - 1997 (94) E.L.T. 215 an Agitator machine which merely was to agitate/mix and keep partially polymerised hydro carbon was held to be a machinery used for production of a commodity . Following these decisions, we have no hesitation to consider the entities impugned herein to be covered by the term machine for the production of a commodity as used in Notification 56/95 at Sr. No. 39 of the Table there to. Since the use is definitely to improve the function or and perform at an intermediate stage on import function for the manufacture of the final products. (g) Since the duty exemption is found to be eligible, the duty demands as made and penalty as arrived at cannot be upheld. 4.7 In case of Jindal Photo Films [1998 (97) E.L.T. 445 (Tribunal)] following was held: 5. Shri L.P. Asthana, learned Advocate, appearing for the respondent submitted that ` ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of a commodity. From a perusal of the Apex Court judgment in Empire Industries Ltd. (supra), we find that the respondent s contention that the process of production is not necessarily confined to the transformation of the raw materials by using a single machine or a single process has force. Production can, in many instances, spread over a number of processes for which various machines are used. It would not therefore be possible to say in such cases that a particular machine or machines is not being used for the production of the final product. In the present case, it is not in dispute that the final product, namely, film rolls used in cameras, undergo a series of charges from the stage of imported Jumbo films to the stage of 35 mm film rolls packed in spools ready for use in camera. The use of the machine presently under consideration is at the stage of putting DX coding, numbering and imprinting the manufacturers name in the film before they are rolled in spools and sent to the market. We find merit in the learned Counsel s contention that without the process of DX coding the product will not be marketable. Having regard to these factors, we are of the view that Signing Mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne should be regarded as being in the production line. The citations referred to by the ld. Consultant are found to be adopting the same line of thinking. In effect, therefore, the machine can be considered as designed for production of a commodity as it improves the functioning of the parts/components by cleaning, which is found to be an essential requirement for fitment of the components/parts to the motorcycle engines manufactured by them and its classification under Heading 84.59(2) is appropriate. This decision was upheld by the Hon ble Apex Court as reported at [1997 (96) ELT 504 (SC)]. 4.9 In case of Karuna Aqua Farms [1999 (112) E.L.T. 175 (Tribunal)] tribunal has held as follows: 3. The learned Consultant for the respondents has pleaded that the term production of commodities should be given a proper meaning. His plea is that fish including prawns are a taxable item both under the Customs Tariff and the Central Excise Tariff. He has pleaded that while the seedlings are purchased by the respondents from outside these seedlings cannot be considered as prawns as such as a commodity for sale and these become prawns as a commodity only after they are grown into ..... X X X X Extracts X X X X X X X X Extracts X X X X
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