1995 (1) TMI 159 - AT - Central Excise

Tribunal classifies vacuum pans as goods, grants duty exemption under Central Excise Notification.

SOUTH INDIA SUGAR LTD. Versus COLLECTOR OF CENTRAL EXCISE, MADRAS

SOUTH INDIA SUGAR LTD. Versus COLLECTOR OF CENTRAL EXCISE, MADRAS - 1995 (77) E.L.T. 611 (Tribunal) Issues Involved:1. Whether the vacuum pans manufactured by the appellants for production of sugar can be construed as complete machinery.2. Classification of vacuum pans under the then Tariff Item 68 of the Central Excise Tariff Schedule.3. Eligibility for duty exemption under Notification No. 118/75-C.E., dated 30-4-1975.Issue-Wise Detailed Analysis:1. Whether the vacuum pans manufactured by the appellants for production of sugar can be construed as complete machinery:The primary issue was whether the vacuum pans fabricated and installed by the appellants constituted 'complete machinery' for the purposes of Central Excise Notification No. 118/75-C.E. The appellants argued that the vacuum pan was not a complete machinery but a part of the sugar manufacturing process, dependent on other machinery to function. They cited various technical descriptions and case laws to support their claim that a vacuum pan alone could not manufacture sugar and thus should not be classified as complete machinery.The respondents contended that the vacuum pan was indeed a complete machinery, as evidenced by its significant cost and its classification as goods bought and sold in the market. They argued that the exemption under Notification No. 118/75-C.E. did not apply to complete machinery manufactured for captive use.Upon reviewing the definitions of 'machine' and 'machinery' from various technical dictionaries, the Tribunal concluded that 'complete machinery' must comprise a set of machines and parts. They determined that while a vacuum pan is a machine, it is not complete machinery in the context of sugar production, which requires additional equipment such as crushers, centrifugals, and juice tanks. Therefore, the vacuum pan did not constitute complete machinery.2. Classification of vacuum pans under the then Tariff Item 68 of the Central Excise Tariff Schedule:The classification of vacuum pans as goods under Tariff Item 68 was also disputed. The Collector (Appeals) had found that the appellants admitted vacuum pans could be purchased from the market, thus classifying them as goods under Tariff Item 68. The Tribunal agreed with this finding, confirming that vacuum pans are goods brought to the market for sale and purchase, and thus classifiable under the said tariff item.3. Eligibility for duty exemption under Notification No. 118/75-C.E., dated 30-4-1975:The Tribunal examined whether the vacuum pans were eligible for duty exemption under Notification No. 118/75-C.E. The appellants argued that the vacuum pans were not complete machinery and thus qualified for the exemption. They cited previous Tribunal decisions where items like storage tanks and electrolytic cells were not considered complete machinery and were granted exemption.The respondents argued that the vacuum pans were complete machinery and thus not eligible for the exemption. They pointed to the notification's proviso, which excluded complete machinery manufactured for captive use from the exemption.The Tribunal concluded that even if vacuum pans were considered machines for sugar production, they did not constitute complete machinery. Therefore, the vacuum pans fell under Item 68 and were entitled to exemption under Notification No. 118/75-C.E.Conclusion:The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants in accordance with law. The vacuum pans were deemed not to constitute complete machinery and thus were eligible for duty exemption under Notification No. 118/75-C.E.