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TMI Blog1996 (11) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... of Explanation to the Rule was correct. Collector (Appeals), at the instance of Respondent, set aside the above decision on the ground that the process of powdering slag, gypsum and clinker is an essential process in relation to manufacture of cement and Steel Balls used in the Ball Mill to powder the articles are "inputs" for the purpose of Rule 57A of the Rules and Steel Balls are not fitted to any equipment and are not covered by the exclusion Clause (i) of the Explanation to the Rule and hence Respondent is entitled to the benefit of Modvat credit. This order is being challenged by the Collector of Central Excise. A Bench which heard the appeal, noticed the conflicting decisions of different Benches on the question arising for decision and referred the appeal to Larger Bench. Accordingly the appeal came up before this Larger Bench, duly constituted. 2. We have heard Shri T.R. Malik, SDR for the appellant, Shri S.K. Bagaria, Advocate of the Respondent and Sri Vishwanathan, Advocate who appears in another appeal for an assessee in a similar position. 3.At the outset we will refer to the decisions of various Benches of the Tribunal on the controversy. The earliest decision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. v. Collector of Central Excise, 1996 (86) E.L.T. 317 (Tribunal), a two-Member Bench, including Shri P.C. Jain, Member (T) who was a party to M/s. Associated Cement Co. Ltd. case, again considered the matter. The Bench observed that the Steel Balls in the process of grinding other inputs get themselves corroded and become part and parcel of the final product, namely, "Hard Ferrites" and the use of Steel Balls is in relation to manufacture of the final product and hence they are "inputs". The Bench referred to the case Electrosteel Castings Ltd. v. Collector of Central Excise, 1989 (43) E.L.T. 305, where it was observed that though Steel Balls are not fitted in the Ball Mill, the latter cannot grind without the Steel Balls in the drum and since the Steel Balls perform an essential part in the grinding by the Ball Mill, must be classed as parts of the Ball Mill and that Steel Balls fall under erstwhile Tariff Item 68 and not erstwhile Tariff Item 26AA. The Bench distinguished the decision on the ground that Steel Balls under consideration were not attached to the Ball Mill and get corroded and become part and parcel of the final product. The Bench held that Steel Balls are not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Item 26AA was exhaustive. There could not be any Steel Casting which could not fall either under sub-items (i) to (iv) and if not, under sub-item (v). Necessarily the residuary item Tariff Item 68 was not attracted. Item attracted was 26AA(v). The decision in Electrosteel Castings Ltd. did not take into consideration the language of Item 26AA(v) and tried to highlight the alleged difference between "Steel Castings" and "parts of machines". The difference had no relevance in the context of Item 26AA(v) which was exhaustive and attracted all other Steel Castings which are parts of machines. The position did not change on 1-8-1983 since same sub-items under substituted Item 25 attracted Steel Castings of specified description and sub-item 16 took in "Castings of Iron or Steel not otherwise specified" and sub-item 16(ii) took in castings of Steel not otherwise specified. In the new Tariff, conflict, if any, in this context may be between Chapter 73 and 84. Chapter 73 of the new Tariff deals with"articles of iron and steel". Heading 73.26 deals with "other articles of iron and steel - forged or stamped, but not further worked." Sub-heading 7326.11 takes in grinding balls and similar art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ker and gypsum are ground to a fine, homogeneous powder. In para 7.7.2 of Cement Data Book by Dipl-Ing Walter H. Duda, it is stated that during the grinding process, the grinding media are subject to wear and generally some quantities of metal are absorbed by the raw materials. Hence, in white Cement, porcelain grinding media are used. The National Council for Cement and Building Materials has certified that Grinding Media "is a consumable item for manufacture of cement and slowly grinding media gets mixed up with the final product. A study on Cement Industry published by Government of India has treated grinding media in Ball Mills as consumables. The study also shows that there are guide norms for consumption of grinding media for wet grinding and dry grinding. 9.Section AA of Chapter V of the Rules deals with Modvat credit scheme. Relevant portion of Rule 57A reads thus :- "Rule 57A. Applicability. — (1) The provisions of this section shall apply to such finished excisable goods (hereinafter referred to as the final products), as the Central Government, may by notification in the Official Gazette specified in this behalf, for the purpose of allowing credit of any duty of exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teel balls to be placed inside the drum in order that it performs its functions. That does not make Steel balls components or parts of Ball Mill. They are not accessories in the sense that they are additional attachments or otherwise enhance the performance or utility of Ball Mill. They are goods the use of which in Ball Mill is essential for the latter's performance. Light is also thrown by the Note in HSN that Balls are classified according to their constituent material and not as parts. It must also be noticed that Steel balls are not attached or fixed to the Ball Mill. As pointed out, Ball Mill will commence operation and drum will start rolling or moving, but grinding will take place only if Steel Balls are present. Thus Steel Balls cannot be regarded as parts of Ball Mill. They are not, in or by themselves, machine or machinery or appliance or tools or the like as they are not self-contained or complete units or group or assembly of parts as explained in Union Carbide India Ltd. v. Collector of Central Excise - 1996 (86) E.L.T. 613 (Tribunal). They are also not part of such goods as indicated already. Even assuming Steel Balls are part of machine or machinery, parts are not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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