R. Jayaraman, Member (T)

1. All the above 15 Appeals are against the Common Order in Appeal passed by the Collector (Appeals) under his Order No. 363 to 377/91, dated 25-4-1991.

2. Since the issue involved in all these appeals is one and the same, they were heard together and hence proposed to be disposed of by this common order.

3. Though, in some cases, some minor issues (which are not common) exist, the Ld. Advocate pleaded that they have not appealed against them and they are pressing only, one issue namely the eligibility of Modvat Credit in respect of duty paid on dry battery cells fitted to the Quartz, Clocks and time pieces.

4. All the four appellants referred to above are engaged in the manufacture of Quartz, Wall Clocks classifiable under 9105.00 of Central Excise Tariff. They bring in duty paid dry battery cells, which are reportedly placed in the battery compartment in such a manner to prevent leakage of the dry cells and thereafter sealed and packed for delivery at the factory gate to the buyers. They filed a declaration under the Modvat Scheme, showing these battery cells as an input against the final product Quartz, Wall Clocks. This, however, came to be objected to by the Department by issue of various Show Cause Notices (all reported to be within the normal limitation period).

5. The Show Cause Notice, only contends that the battery cell cannot be considered as an input used in the manufacture of final product namely clocks. However, in the order of the Assistant Collector, the following reasoning is given for holding that it is not an input for wall clock. "Rule 57A of the Central Excise Rules speaks of goods used in or in relation to the manufacture of the final product as specified in the notification issued under this Rule. The battery cells are not required in the course of manufacture of Quart/, Clocks but are required only to run the same. The battery cells are used for operational functions and are more in the nature of accessories of clocks than inputs in the same. Therefore the dry battery cell cannot be regarded as an input used in or in relation to the manufacture of Clock and time pieces".

6. In Appeals before the Collector (Appeals), he rejected the appeals by the Common Order, which is now impugned before us.

7. The only issue for consideration in all these appeals is whether Modvat Credit of duty paid on dry battery cells is available for payment of duty towards the final product - Quartz, Wall Clock/time pieces, treating the cells as inputs for the above final products in terms of Rule 57A of the Central Excise Rules.

8. We heard the elaborate, interesting and attractive arguments from the Ld. Advocate Shri Sheth on behalf of the appellants and equally effective rebuttal by the Ld. SDR Shri Mondal.

9. For the sake of avoiding repetition, we are not separately recording them but would consider them in our findings at the appropriate stage.

10. Before proceeding to consider the rival contentions from both the sides, certain factual position, presented before us by the Ld. Advocate is required to be stated.

They are as below :-

(i) These battery cells, in some cases, are purchased from manufacturers of dry cells on 'Made to Order' basis with the names of the appellants embossed on the cells, (samples shown to us).

(ii) These cells are placed in the compartment meant for fitment of cells in the clock, in such a manner that they are not exposed to leakage. Thereafter they are sealed and the clocks packed with battery cells placed in the clock. These packs with dry cells only are delivered in the course of wholesale to dealers at the factory gate.

(iii) Quartz Clock is a modern development and it is an electronic item. It uses quartz crystals, which control the impulses on the clock movement. Battery cells provide the requisite power for motivating the impulses.

(iv) As against Quartz Clocks, old time clocks were operated on spring mechanism motivated by a key, operated mechanically.

11. Against the af