R. Jayaraman, Member (T)

1. Both the aforesaid appeals are directed against the order of the Collector of Central Excise (Appeals), Bombay bearing No. R-523-524/AUR/89 dated 29-6-1989. Since both the appeals involve consideration of the same issue, they were heard together and hence this common order.

2. The facts of the case for purpose of disposal of the appeals can be briefly stated as below:

The appellants are engaged in the manufacture of iron and steel castings at their foundry. They have sought for availing of modvat credit in respect of the duty paid on the inputs, which are in the nature of certain chemicals going into the preparation of 'sand moulds' for casting. Availment of modvat credit in respect of the said inputs going into the preparation of sand moulds was objected to by the department on the ground that the inputs are used in the preparation of sand moulds, which are in the nature of equipments and hence inputs so used in the preparation of sand moulds would not be eligible for modvat credit in view of the explanation to Rule 57A of the Central Excise Rules. It was also alleged by the department that the sand moulds were final products falling under sub-heading No. 8480.00 of the Central Excise Tariff 1985 and had been exempted from the payment of duty under Notification Nos. 220/86 and 381/86. Hence credit cannot be allowed on the duty paid on the inputs used in the preparation of sand moulds because of the provisions of Rule 57 (C) of the Central Excise Rules. In the adjudication proceedings initiated under 5 different show cause notices, the Assistant Collector held that the appellants are not entitled to take modvat credit in respect of inputs used in the preparation of sand moulds and directed the appellants to credit a sum of Rs. 11,35,8907- for the period from 1.4.1987 to 31.5.1988 and another sum of Rs 4,47,376.35 in respect of the period from 1.6.1988 to 31.10.1988. The appellants took the matter in appeals before the Collector (Appeals) which were rejected by the said authority. The present two appeals are against the said order of the Collector (Appeals) rejecting their appeals.

3. Shri Hidayatullah, the learned advocate, on behalf of the appellants, stated that the main issue to be considered in these two appeals, is whether certain foundry chemicals used in the preparation of sand moulds are eligible for modvat credit. Shri Hidayatullah, dealt elaborately with the process of preparation of various kinds of sand moulds for casting and also took us through the photographs and write up to bring home the fact that only shell sand moulds have greater shelf life and at the most these moulds only could be considered as marketable. He stated that there are three types of moulding: green sand moulding, cold setting sand moulding and shell sand moulding. Only in the case of shell sand moulding, they can be construed as marketable, whereas in the case of other two, they cannot be construed as goods, since they are not marketable but are highly unstable. He also contended that as per the provisions of Rule 57(A), final products referred to therein means - finished excisable goods. Hence, only if they are excisable goods, they can be construed as final product. In this case, because the aforesaid moulds are not marketable, they cannot be construed as goods and hence cannot be construed as final products. Hence, application of Rule 57(C) in their case by the department is not legally justified. He also contended that the Assistant Collector has misconstrued the whole issue by classifying all the sand moulds as marketable, whereas, only shell sand moulds 'can at the best, be construed as marketable. Because of this misconception and misunderstanding, he has held that all the sand moulds are final products and hence, Rule 57(C) is attracted. He also contended that the moulds for metals may be classifiable under Chapter 8480.00; but what is classified under Central Excise Tariff can only be moulds, which are