Back
High Court Of Calcutta
Ruma Pal
SINGH ALLOYS AND STEEL LTD. - Appellant
Versus
ASSISTANT COLLECTOR OF CENTRAL EXCISE - Respondent
CO 5448 (W) Of 1991
Decided On : 01/08/1993
CENTRAL EXCISE ACT, 1944 - RULE 57A - MODVAT CREDIT - INTERPRETATION - 'INPUTS' - DOLOPATCH MIX, MAGNESITE PEAS AND RAMMING MASS USED IN THE MANUFACTURE OF STEEL INGOTS - WHETHER INPUTS - HELD, YES.
Fact of the Case:
The petitioner claimed modvat credit in respect of dolopatch mix, magnesite peas and ramming mass used in the manufacture of steel ingots. The Assistant Collector of Central Excise held that the petitioner was not entitled to any modvat credit in respect of the items as they were not inputs within the meaning of Rule 57a. The petitioner preferred appeals and the Collector of Central Excise allowed the appeals and held that the items were inputs within the meaning of Rule 57a. However, for a subsequent period, the petitioner was called upon to show cause why the modvat credit should not be disallowed in respect of the items and a demand was raised for the Excise duty payable by reason of the disallowance of the credit. The petitioner challenged the order by filing a writ petition.
Finding of the Court:
The court held that the impugned order of the Assistant Collector cannot be sustained and is accordingly quashed. The bank guarantee furnished by the petitioner in respect of the demand made under the impugned order is discharged. The claim of the petitioner for refund of any payment made pursuant to the interim order dated 10th April, 1991 may be obtained by the petitioners under Section 11b of the Act from the respondent authorities subject to the provisions of that section and in accordance with law.
Issues: Whether dolopatch mix, magnesite peas and ramming mass used in the manufacture of steel ingots are 'inputs' within the meaning of Rule 57a of the Central Excise Rules, 1944.
Ratio Decidendi: The court interpreted the definition of 'inputs' in the explanation to Rule 57a and held that the items in question are inputs within the meaning of the explanation. The court further held that the items are not plant, machine, machinery, appliances, etc., and therefore, are not excluded from the definition of inputs.
Final Decision: The court quashed the impugned order of the Assistant Collector and directed the respondent authorities to refund the amount paid by the petitioner pursuant to the interim order.
( 1 ) THE point involved in this writ petition is the construction of Rule 57a of the Central Excise Rules, 1944 (referred to as the Rules ). Rule 57a allows for credit of duty paid on excisable goods used as inputs on the manufactured item. The question is whether dolopatch mix, Magnesite Peas and ramming mass is an input of steel ingots.
( 2 ) THE word 'inputs' has been defined in the explanation to Rule 57a. The explanation reads as follows :-"explanation - For the purpose of this rule "inputs" includes - (a) inputs which are manufactured and used within the factory of production or in relation to the manufacture of final products; and (b) paints and packaging material, but does not include - (i) Machines, machinery, plant, equipment, apparatus, tools or appliances 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; (ii) packaging materials in respect of which any exemption to the extent of the duty of excise payable on the value of packaging materials is being availed of for packaging any final products; (iii) packaging materials the cost of which is not included or had not been included during the preceding financial year in the assessable value of the final products under Section 4 of the Act. (iv) cylinders for packing gases (v) plywood for the tea chests, or (vi) bags or sacks made out of fabric (whether or not coated, covered or laminated with any other material) woven from strips or tapes of plastics ). "
( 3 ) THE scheme by which credit of Central Excise duty is available is known as the modvat scheme and the credit is known as modvat credit.
( 4 ) ANALYSING the meaning of inputs as provided in the explanation it would appear that everything is an input if it is (i) manufactured and used within the factory of production or (ii) used in relation to the manufacture of the final products, and (iii) paints and packaging material. The exceptions relate to items which would otherwise have come within the inclusive definition of inputs. The need to except arose because the items would otherwise have been covered :"words excepting a species from a genus are meaningless unless the species in question prima facie falls within the genus. 'all hats other than top hats' makes sense. 'all top hats other than bowler hats' does not. Equally little does 'all top hats and other articles except gloves', 'if other articles' are to be read as ejusdem generis with 'top hats'. " (See : Allen v. Emerson (1944) 1 All ER 344, 347)
( 5 ) SECONDLY the phrase "in relation to" has a wide connotation "renusagar Power Co. Ltd. v. General Electric Co. ; Doypack Systems Pvt. Ltd. v. Union of India and Ors.
( 6 ) THE object of the legislature appears to me to be to exclude from the genus of inputs, the species mentioned in the excluded categories because otherwise a manufacturer would be entitled to claim modvat in respect of such inputs repeatedly as these would not be inputs which would be consumed in the process of manufacture. This is clear from a scrutiny of the excluded inputs.
( 7 ) IT is not disputed that Ramming mass and dolopatch mix have been classified as miscellaneous chemical products under Chapter 38 Heading 3816. 00 of the Schedule to the Central Excise Tariff Act, 1985. Magnesite peas have been classified under Heading No. 28. 20 of the Schedule to the Tariff Act which deal with Manganese Oxides. Heading No. 28. 20 is under Chapter 28 which deals with inorganic chemicals, organic or inorganic compounds of precious metals, or rare earth metals, of radioactive elements or of isotopes. These three items are used when ingots are manufactured. It is the admitted case that these items are first charged into the furnace as fettling materials. The items dissolve and seal the crevices in the refractory walls of the furnace to prevent leaking of the liquid metal from 1 the furnace and to reduce the erosion of the refractory
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
