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TMI Blog2003 (3) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Machine with the pitch requisitely adjusted. The coil so produced on the primary coiling machine was called primary coil. The primary coil was then converted into a secondary coil by coiling the primary coil around another thick Molybdenum wire. The Molybdenum wires were then removed by treatment of the coil system with an acid mixture in which the Molybdenum wires dissolved leaving behind the coiled Tungsten filament which was ready for use in a lighting system. 3.The appellants took Modvat credit on Molybdenum wire as input under Rule 57A of the Central Excise Rules, 1944 to the extent of Rs. 2,88,355/- during December, 1996 to March, 1997 and to the extent of Rs. 2,17,380/- during April to July, 97, totalling to Rs. 5,05,735/-. Two show cause notices were issued in respect of the two periods, wherein the appellants were directed to show cause why the credit should not be disallowed on the ground that the Molybdenum wire was a consumable 'appliance' used for coiling of Tungsten wire and was not an eligible input under Rule 57A ibid. The notices also proposed to impose penalty on the party under Rule 173Q. The notices were contested. The original authority which adjudicated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause of Rule 57A. The Bench rejected the Board's interpretation and relied on its own earlier decision in Apar Ltd. (supra), wherein Molybdenum wire had been held to be an 'appliance' in the exclusion clause of Rule 57A. Counsel pointed out that the Board's Circular had not been noticed by the Bench in the Apar case. On the other hand, Counsel submitted, the South Zonal Bench (SZB) of the Tribunal, in the case of CCE, Madras v. Kalpana Lamps Components Ltd. [1997 (91) E.L.T. 162], considered the Board's Circular and relied on the Tribunal's Larger Bench decision in Union Carbide India Ltd. v. CCE [1996 (86) E.L.T. 613] to hold that Molybdenum wire used for the manufacture of Tungsten filament did not come within the coverage of the term 'tool' and should be considered to have been used in or in relation to the manufacture of tungsten filament used in fluorescent tubes. The SZB accordingly held Molybdenum wire to be an eligible input under Rule 57A. Counsel also relied on the decision of the Tribunal's Northern Bench (DB) in ECE Industries Ltd. v. CCE [1998 (97) E.L.T. 146] wherein also the Board's Circular and the decision in Kalpana Lamps Components (supra) had been relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) used in or in relation to the manufacture of specified final products, had an explanation in sub-rule (1) thereof which contained both inclusive and exclusive clauses. The exclusionary clause relevant to the instant case is extracted below :- "Explanation. - For the purposes of this rule, 'inputs' includes -- . . . but does not include - (1) Machines, machinery, plant, equipment, apparatus, tools, appliances or capital goods as defined in Rule 57Q used for producing or processing of any goods or for bringing about any change in any substance in or in relation to the manufacture of the final products;" The above provision as such was in force up to 28-2-1997. It excluded the items specified therein from the category of inputs eligible for the credit under the rule. This exclusionary provision was, through an amendment made w.e.f. 1-3-97, was transplanted in a modified form Rule 57A to Rule 57B. The relevant extract of sub-rule (2) of Rule 57B containing the said provision is given below :- "(2) The manufacturer of the final products shall not be allowed to take credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wire being considered as a 'tool' to be hit by the exclusionary clause under Rule 57A. As, according to ld. SDR himself, the terms 'tools' and 'appliances' used in the exclusionary clause are interchangeable, the respondent can have no quarrel with the proposition that the Board's circular should also be taken to have ruled out the Molybdenum wire being considered as an 'appliance'. The instruction of the Board under Section 37B of the Central Excise Act is binding on the Revenue as held by the Apex Court in the judgments cited by the ld. Counsel. The ruling given by the Constitution Bench of the Court in Dhiren Chemical Industries (supra) is particularly noteworthy in this context. The respondent, therefore, cannot be heard to say anything against the Board's interpretation of "tool" or against its view on whether the Molybdenum wire used for the manufacture of Tungsten filament was a tool or not. Secondly, the WZB of the Tribunal had no occasion to consider the Board's Circular in the case of Apar Ltd. (supra) relied on by the DR. Of course, in the case of Jay Electric (supra), the Bench did consider the Circular but did not accept the Board's view. The Bench concluded that Moly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plant : The land, buildings and equipment used in an Industry. Tool : Any device, instrument or machine for the performance of an operation. Academic Press Dictionary of Science and Technology : Appliance : In general, any tool or machine that is used to carry out a specific task or produce a desired result. Machine : Any device that transmits or modifies energy, an assembly of inter-related parts, each with a definite motion and separate function. Machinery : A group of parts or machines that are arranged to perform a particular operating or machining function. Plant : An engineering production facility, a factory, electric power station or the like. Tool : A portable and usually hard-held instrument that is used to increase the efficiency of a work effort. Words and Phrases, Permanent Edition - Vol. 7A : Apparatus : It means a collection or set of materials, implements or utensils for a given work, a complex device or machine or a set of tools, appliances, any complex instrument for a specific action or operation, machinery or mechanism. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wire had no specific function to perform, nor was it an equipment that drew any electric or other energy to produce any desired result. Hence it did not satisfy the test of tool/machine/appliance laid down by the Larger Bench in Union Carbide. 9.The Molybdenum wire, admittedly, had a one-time use only. Mechanical and chemical forces the former when tungsten wire was tightly wound over it, and the latter when it was treated with acids later on destroyed its very physical existence as a wire thereby ruling out its further use. It is not the Revenue's case that the appellants regenerated the Molybdenum wire from its solution in acids and used it again as mandrel in the manufacture of another Tungsten filament. It is difficult for us to conceive any such thing (which is wholly consumed or destroyed in use) as a tool or appliance. If the copper wire which was used in the manufacture of tin containers and became copper waste incapable of being used again in such manufacture could be held not to be a tool or appliance, the Molybdenum wire which disappeared irretrievably at the final stage of manufacture of a tungsten filament should a fortiori be held not to be a tool or appliance. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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