9911796707
TMI Blog1995 (7) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... ported by them. Their claim was disallowed by the Assistant Collector of Central Excise which decision was set aside by Collector of Central Excise (Appeals) on appeal by them which has led to the present appeal by the department. The reference to the Larger Bench has been made in view of the conflicting decisions on similar issue by the different Benches of the Tribunal. Thus, while the South Regional Bench had held in the case of Wipro Infotech Limited v. Collector of Central Excise, Bangalore reported in 1994 (69) E.L.T. 82 that Ribbon used in relation to the manufacture of printers for computers is not eligible for Modvat Credit on the ground that the manufacture of printers is complete without the Ribbons being fitted on to it and Ribbon is only an accessory and not a component part of the line printers, the West Regional Bench had held in the case of Jayshree Industries reported in 1993 (63) E.L.T. 492 that dry cells fitted in Quartz clocks and timepieces are essential components to make the final product operational and marketable and not an accessory therefor. Again, the North Regional Bench of the Tribunal had held in Collector of Central Excise v. Swaraj Mazda - 1993 (68) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment of duty. That is not a factor for deciding the eligibility of ribbon for grant of Modvat benefit while clearing the printers. The printers are marktable without the ribbons and the ribbons are also sold separately to the customers. Shri Mathur, learned Joint Chief Departmental Representative then referred to the decision of the South Regional Bench of the Tribunal in Wipro Infotech Limited v. Collector of Central Excise, Bangalore reported in 1994 (69) E.L.T. 82. There, the very item in question in the present matter, namely, ribbon was held to be only an accessory for printers for computers and hence not eligible for Modvat Credit. 3A. Shri Mathur, thereafter referred to the Tribunal decision in Collector of Central Excise v. Swaraj Mazda reported in 1993 (68) E.L.T. 258 which is one of the decisions relied upon in the order of the referring Bench in support of the proposition that Modvat Credit is admissible and distinguished the said case from the present one. The floormats in the Swaraj Mazda case were specially designed to suit the particular vehicle. Likewise, in the case of Collector v. Jay Engineering Works Limited decided by the Honourable Supreme Court and repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the international practice for the manufacturers of printers to supply them, fitted with ribbons. In answer to a further query about judgments on similar issues subsequent to the passing of the referring order, Shri Joshi fairly conceded that the Honourable Patna High Court had, in the case of Tata Engineering Locomotive Company Limited v. Union of India reported in 1994 (72) E.L.T. 525, held that Tool Kits supplied with motor vehicles by manufacturers, on the request of customers, are not inputs used in or in relation to the manufacture of such motor vehicles. The Special Leave Petition against the said judgment filed by the company has been dismissed by the Honourable Supreme Court as reported in 1994 (73) E.L.T. A129 in the Section `Court Room Highlights'. He, however, distinguished that case from the instant matter stating that the tool kits were supplied by TELCO to certain customers as per their option. Motor Vehicles were supplied without such kits also. In the present case, the line printers are always sold with the ribbons and it is not an optional supply. The way in which the product is marketed is very material for deciding the question, he submitted and on this grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt judgement in the Kores case wherein it had been held that ribbon is an accessory and not part of typewriter though it may not be possible to type out any matter without it. He reiterated the plea raised in the appeal and urged that the same be allowed. 8.We have considered the submissions made by both the sides. The Assistant Collector had disallowed Modvat Credit claimed by the respondents herein of countervailing duty of Rs. 1,22,109/- paid by them on Ribbons. He had rejected their claim holding that they had not filed any declaration or intimation regarding the inputs and outputs of commodity, Ribbon, as required under Rule 57G of Central Excise Rules. He had noted that although they had filed modvat declarations on 17-4-1987 and 11-4-1988 and declared final products, "Line Printers" and "parts and accessories" and also declared their inputs and outputs, no such intimation had been given with regard to ribbons. He had then observed that they were using ribbons captively for use in the line printers. The ribbons falling under Heading 9612.00 are exempt from duty under Notification 217/86 dated 2-4-1986. As per rule 57D, (sic) Modvat is not available if final product is exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve no effect on the question for decision before us, namely whether ribbons constitute inputs in relation to manufacture of Line Printers. 9.Before proceeding to deal with the matter on merits, we have to decide the preliminary point raised by the respondents that it is not open to the department to make out a new case against them in the present appeal which was not the issue dealt with by the Assistant Collector. The Assistant Collector had not taken the stand in the earlier proceedings that Ribbons are not inputs in the manufacture of Line Printers. His finding was not to that effect. There appeal, therefore, was not on this question and the Colector (Appeals) had also not disposed of the appeal before her from this angle. The question whether ribbons are inputs in the manufacture of line printers has been raised for the first time in the present appeal. This has been assailed by the respondents. In this regard, the learned Senior Departmental Representative, Shri Sanjeev Sachdeva had pointed out that the Collector (Appeals) had held in his order that ribbons are used in the manufacture of line printers and that it is this finding that is challenged in the appeal. This is corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the printer could not be marketed without the fitment of ribbons. We had, in addition, invited the attention of the learned counsel for the respondents to the judgment of the Patna High Court in Tata Engineering Locomotive Company Limited (TELCO) v. Union of India reported in 1994 (74) E.L.T. 525. Shri Udai Joshi, learned Counsel sought to distinguish the said case from the present one stating that in that case the tool kits were supplied at the option of the purchasers whereas the line printers are invari-ably supplied by them with the ribbon fitted. We shall examine the applicability of these decisions to the present case. 11. The Wipro Infotech case essentially followed the Supreme Court decision in State of UP v. Kores (India) Limited. In the latter case, the Supreme Court was concerned with an appeal by the State of UP against the judgement of the Allahabad High Court that Typewriter Ribbon is an accessory of Typewriter and not part therof. The appeal was dismissed upholding the High Court's finding. As Kores (India) Limited were manufacturers/sellers of Typewriter Ribbons and not of typewriters themselves and as it was a case of sale of such Ribbons separately from Typewrit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter at the time of its assembly and supply can be said to be used in or in relation to the manufacture of printer. The customer may replace it later on when it gets worn out and replace it with a new one but as far as the initially fitted ribbon which is supplied with the printer is concerned, it is to be taken as used in relation to the manufacture of the printer. 12. .Shri Joshi, learned counsel for the respondents sought to distinguish the Telco judgement of the Patna High Court from the present case by pointing out that the Tool Kits were supplied with the motor vehicle chassis at the option of the purchasers whereas in the present case ribbons are invariably supplied with the printer. Of more importance is the fact that tool kits are not used in or in relation to the manufacture of the motor vehicles and they are not necessary for making use of them. Only when some repair or attention is necessary at intervals after the vehicles are used for sometime would the tool kits be made use of. Their being supplied alongwith the vehicles has been held to be not amounting to their being used in or in relation to the manufacture of vehicles. 13. One of the reasons which weighed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts is also manufactured and duty is paid thereon. Definitely, therefore, the motor vehicle chassis are fitted to be manufactured within Section 2(f) whether or not tool kits are supplied alongwith the motor vehicles. Again tool kits supplied with the motor vehicle chassis do not participate directly or indirectly in or in relation to manufacture of the motor vehicle chassis. The chassis is already manufactured goods and counted for as final product in petitioners RG 1 register whether or not tool kit is supplied. There is no doubt that the supply of the tool kits is a subsequent action to the manufacture of chassis to be used in relation to maintenance and repair of the motor vehicle chassis and not used in relation to the manufacture of the final product. 21. It is also settled law that value of accessories and spares should be added to the value of the motor vehicle chassis and accordingly the petitioners include the value of tool kits in the value of the motor vehicle chassis manufactured by them. In our opinion, the criteria for determination and inclusion of value is not the basis for allowing and disallowing Modvat credit as per provision stipulated under modvat credit as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the question whether an article is a part or accessory of the goods manufactured and cleared is not conclusive of its Modvat eligibility. The essentiality of the ribbon in the functioning of the printer and its fitment in the structure of the printer set it apart from the case of tool kits supplied with the motor vehicles. We accordingly hold that this view is not in conflict with the judgement of the Patna High Court in the Telco case, the Special Leave Petition against which filed by them had also been dismissed by the Honourable Supreme Court as reported in 1994 (73) E.L.T. A129. 15.In the order of the Bench which originally heard this matter and referred to the larger Bench, note was taken of the earlier decisions in Collector of Central Excise v. Swaraj Mazda reported in 1993 (68) E.L.T. 258 and Jayshree Industries v. Collector of Central Excise reported in 1993 (63) E.L.T. 492 wherein it was respectively held that specially designed floor mats supplied with motor vehicles and dry battery cells supplied with quartz clocks and timepieces were held to be inputs eligible for Modvat. These decisions, no doubt, were taken before the aforesaid Telco judgement of the Honourab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No. 201/79 dated 4th June, 1979, which was for the purpose of relief on the duty of excise paid on goods falling under Tariff Item 68, when these goods were used in the manufacture of other excisable goods. The said notification stated that in supersession of the Notification No. 178/77 of the Central Excise dated 18th June, 1977, all excisable goods on which duty of excise was leviable and in the manufacture of which any goods falling under Item No. 68 have been used, were exempt from so much of the duty of excise leviable thereon as was equivalent to the duty of excise already paid on the inputs. In that case, the question before the Tribunal was whether the nameplates could be considered as component part of the electric fan, so as to be eligible for proforma credit under the exemption notification. It was found by the Tribunal that no electric fan could be removed from the factory for being marketed without the nameplate. The Tribunal also noted in that case that even though it could be said that electric fans could function without the nameplates, for actual marketing of the fans, the affixation of the nameplate was considered an essential requirement. 6. To be able t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were manufactured and sold by a Ribbon manufacturer and not sold by a typewriter manufacturer after fitting the ribbon therein. Though factors like essentiality of the accessory in question for the functioning of the article and the inclusion of the cost of such accessories in the value of the article in question may not be conclusive for deciding the admissibility for Modvat of such accessories and the real test is whether the said accessories are used in or in relation to the manufacture of the final product, we are of the view that the Ribbons in the present case satisfy this test as already examined by us in paragraph 11 of this order. The observations in the Tax Reforms Committee about dry cells used in Quartz Clock referred to in the Jayshree Industries decision will be equally applicable in the present case. 16.While coming to the above conclusion, we would answer the question actually posed by the referring bench that the inputs to qualify for Modvat Credit under Rule 57A of the Central Excise Rules would be those which are used in or in relation to the manufacture of final product. Items which are provided normally with the final products ready for delivery at the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
