A.J.F. D'Souza, Member (T)

1. Revision Application dated 6-12-78 under Section 36 of the Central Excises and Salt Act, 1944 against Order No. 619-CE/78 dated 17-8-78 passed by the Appellate Collector of Central Excise and Customs, New Delhi has been transferred to the Tribunal for disposal in terms of Section 35P(2) of the Act.

2. The question for decision in this case relates to Notfn. No. 178/77 and the scope of the word 'inputs' appearing therein in relation to Wooden Drums used in the manufacture of Electric Wires and Cables.

3. The appellant is engaged in the manufacture of Electric Wires and Cables which fall under Tariff Item No. 33-B of the First Schedule to the Act. On 11th July, 1977, the Central Excise Divisional Officer i.e. Assistant Collector, Jabalpur asked the appellant to show cause why the exemption under Notfn. No. 178/77 dt. 18-6-77 claimed in their Classification List dt. 18-6-77 in respect of Wooden Drums, called 'inputs' assessable under T.I. No. 68 and purchased from outside, should not be approved without duty exemption of 2% A.V. on the said wooden drums. By his order dated 31st August, 1977, the said Assistant Collector who had studied the records and visited the factory held that after the use of the electric wires and cables wound on it, the drum is of no use and becomes a waste material. It is not, in fact, used in the manufacture of electric wires and cables but facilitate the manufacture like any other machinery and cannot be taken as an integral part of the electric wires and cables. As such, it is not an input. Further, when the wires and cables are sold retail, some length as required by the customer is cut and the entire quantity is sold piecemeal after which the drum is of no use, showing that it is not an integral part of the wires and cables. He went on to add that "drum if it is treated as packing material, the value thereof has to be included in the assessable value under Section 4(4)(d)(i) since it is not of durable nature and not returnable by the buyer to the assessee. The cost structure of the electric wires and cables has to include the value of the drum, as such it cannot be treated as integral part of the finished excisable goods. The value of the drum can very well be ascertained". He, therefore, approved the Classification List without giving exemption of duty paid on wooden drum under Tariff Item 68 as envisaged in Notfn. 178/77 dated 18-6-77.

4. In the impugned order, it was held that the Wooden Drum is not, in fact, used in the manufacture of electric wires and cables but facilitates the process and since it is discarded and becomes waste after use of the wires and cables, it cannot be called an integral part because it has not gone into their manufacture. The Appellate Collector upheld the order of the Assistant Collector as correct in law.

5. The grounds for the present appeal are that the Appellate Collector failed to appreciate all the facts and circumstances of the case. He grossly erred in interpreting the said notification by holding that the wooden drums were not inputs and are not used in the manufacture of wires and cables but merely facilitate the process. He failed to realise that the drums are a necessary part of the cable without which they cannot be manufactured/removed for sale/transported. He failed to appreciate that wires and cables are necessarily required to be sold in drums as is the prevalent practice and he erred in holding that they are not an integral part merely because they are discarded. His order is otherwise bad in law and liable to be set aside.

6. Shri Sorabjee, the learned .Counsel for the appellant drew the attention of the Bench to Notfn. No. 178/77 which exempted "all goods (hereinafter referred to as the 'said goods', on which the duty of excise is leviable and in the manufacture of which any goods falling under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) (herein referred to. as inputs) have been us