2003 (3) TMI 144

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....was wound tightly around a Molybdenum wire of pre-determined size on a Primary Coiling 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 un....

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.... of Jay Electric (supra), a wrong interpretation was placed on the term "tool" by the West Zonal Bench (WZB) of the Tribunal. In that case, Molybdenum wire was held to be a tool within the meaning of this term in the exclusion 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. Counse....

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....upra), ECE Industries (supra) and other cases. 7.We have examined the rival submissions and arguments. We note that, during a part of the period of dispute, Rule 57A, which provided for Modvat credit on specified goods (inputs) 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 t....

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.... (2) of Rule 57B for the period from 1-3-97. 8.Ld. SDR has cited dictionaries and other references to show that 'tools' and 'appliances' are interchangeable terms and has relied on the Tribunal's decision in Apar Ltd. (supra) and Jay Electric (supra) to establish that the Molybdenum wire is within the coverage of 'tools' or 'appliances'. We are unable to be persuaded by these arguments for a variety of reasons. Firstly, the CBEC had clearly ruled out Molybdenum 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 he....

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.... carry out a specific function.             Appliance :       A piece of equipment that draws electric or other energy and produces a desired work-saving or other result.             Equipment :      One or more assemblies capable of performing a complete function.             Machine :         A mechanical, electric or electronic device, a combination of rigid or resistant bodies having definite motion and capable of performing useful work.             Machinery :      A group or parts of Machines arranged to perform a useful function.             Plant :   The land, buildings and equipment used in an Industry.             Tool :   Any device, instrument or machine for the performance of an operation. ....

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....ively; also the working parts of a machine, engine or instrument; as the machinery of a watch. The means and appliances by which anything is kept in action or a desired result is obtained; a system of parts adopted to a purpose.             Plant :   is an all embracing term expressive of land, buildings, and the equipment of the business conducted on the premises. Plant is an entity itself, wholly distinct from the land, buildings, machinery and appliances which compose it.             Tool :   An instrument of manual operation, like a human saw, plane, file or the like used to facilitate mechanical operations, as distinguished from an appliance moved by and regulated by machinery." In the Union Carbide case, it was contended by the Revenue that the Copper Wire which was used in the manufacture of tin containers was an 'appliance' within the exclusion clause of Rule 57A. The Larger Bench examined the Revenue's contention and held as under :- "Appliance" as generally understood is any tool or machine that is used to carry out a specific task ....