Full Judgment Text
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CASE NO.:
Appeal (civil) 1627 of 1994
PETITIONER:
COLLECTOR OF CENTRAL EXCISE, NEW DELHI
RESPONDENT:
HINDUSTAN SANITARYWARE & INDUSTRIES
DATE OF JUDGMENT: 10/09/2002
BENCH:
SYED SHAH MOHAMMED QUADRI & S.N. VARIAVA
JUDGMENT:
JUDGMENT
2002 Supp(2) SCR 224
The following Order of the Court was delivered by
These two appeals arise from the judgments of the Customs, Excise and Gold
(Control) Appellate Tribunal in Order No. 304/91-C in E/Appeal No. 3841/90-
C dated April 1, 1991 and in Order No. 600/91-C in E/Appeal No. 2031/91-C
dated July 19, 1991. The judgment in Order No. 304/91-C in E/ Appeal No.
3841/90-C dated April I, 1991 is followed in Order No. 600/91-C in E/Appeal
No. 2031/91-C dated July 19, 1991.
The respondent, a manufacturer of sanitary ware, uses plaster of paris as
inputs for the final product of sanitary ware. The process involves making
of moulds from plaster of paris which are in turn used as inputs for
manufacture of sanitaryware. The respondent claimed the benefit of
exemption under Notification No. 217/86 (as amended by Notification No.
82/87-CE.)
In these cases, though the Excise authorities declined to grant the benefit
of exemption, the Customs, Excise and Gold (Control) Appellate Tribunal set
aside their orders and held that the exemption would apply to the
respondent.
Mr. R.P. Bhatt, learned senior counsel appearing for the revenue, contends
that as the moulds of plaster of paris are goods classified under the
Central Excise Tariff Act, 1985 they cannot be treated as inputs; they must
be treated a the final product and as they are exempted, the respondent is
not entitled to the benefit of exemption under Notification No. 217/86.
We are afraid, we cannot accept the contention of the learned senior
counsel.
The said Notification reads as follows:
"SPECIFIED GOODS USED WITHIN THE FACTORY OF PRODUCTION IN THE MANUFACTURE
OF FINISHED GOODS.
In exercise of the powers conferred by sub-rule (1) of Rule 8 of the
Central Excise Rules, 1944, the Central Government hereby exempts goods
specified in column (2) of the Table hereto annexed (hereinafter referred
to as ’inputs’) manufactured in a factory and used within the factory of
production, in or in relation to the manufacture of final products
specified in column (3) of the said Table, from the whole of the duty of
excise leviable thereon, which is specified in the Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986) :
Provided that nothing contained in this Notification shall apply to inputs
used in or in relation to the manufacture of final products which are
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exempts from the whole of duty of excise leviable thereon or is chargeable
to nil rate of duty.
Explanation : For the purposes of this notification, "inputs" does not
include -
(i) to (iv)
*
*
THE TABLE
*
S.No. Description of Inputs
Description of final products
1. Goods classifiable under any headings of chapters 28,29, 30, 32, 33, 34,
35, 36, 37, 38, 39,40, 48, 70, 72, 73, 74, 75, 76, 78, 79,
80,81,82,83,84,85,86, 87,88,89,0,91,92,93, 94, 95, or 96
(other than those falling under Heading Nos. 36.03 or 37.05) of the
Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)
Goods classifiable under any headings of chapters 28, 29, 30, 32, 33, 34,
35, 36, 37, 38, 39, 40, 70, 72, 73, 74, 75, 76, 78, 79, 80,
81,82,83,84,85,86,87, 88,89,90,91,92,93,94, 95, or 96
(other than those falling under Heading Nos. 36.03 or 37.05) of the
Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)
The Notification, extracted above, was amended by Notification No. 82/87-CE
which is as under :
"Exemption to captive consumption of MODVAT items - In exercise of the
powers conferred by sub-rule (I) of Rule 8 of the Central Excise Rule,
1944, the Central Government hereby makes the following further amendment
in the Notification of the Government of India in the Ministry of Finance
(Department of Revenue) No. 217/86-Central Excise, dated the 2nd April,
1986, namely :
In the said notification for the Table, the following Table shall be
substituted, namely :
THE TABLE
S.No. Description of Description of
Inputs final products
1. Goods classifiable under Goods classifiable under
any headings of under any headings of
chapters.......25......(other chapters.......69.....(other
than those falling under than those falling under
Heading Nos. 36.05 or Heading Nos. 36, 05 or
37.06) of the Schedule to 37.06) of the Schedule to
the Central Excise Tariff the Central Excise Tariff
Act, 1985 (5 of 1986) Act, 1985 (5 of 1986)
A perusal of the Notification as amended by Notification No. 82/87,
extracted above, shows that the description of inputs given in column (2)
under Chapter 25, would be ’plaster of pans’ and the final product given in
column (3) under Chapter 69 would be ’ceramic goods’.
The proviso postulates a situation where the final product itself is
exempted in which case alone the exemption of plaster of paris under
Notification No. 217/86 cannot be availed. It is nobody’s case that the
sanitaryware falling under Chapter 69 has been exempted by the Central
Government. What is exempted is plastic moulds but they are only inputs and
not final product in this case. This fact is further clarified by the
Central Government in Notification No. 221/86, as amended by Notification
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No. 89/ 89. Item 6 thereof clearly mentions that plaster of paris moulds
are input for ceramic products.
From the above discussion, it follows that plaster of paris which is used
as inputs in relation to the manufacture of sanitaryware (final product),
is exempt under Notification No. 217/86 dated April 2, 1986, as amended.
In this view of the matter, we do not find any illegality in the orders
under challenge.
The appeals are, therefore, dismissed, but in the circumstances of these,
there shall be no order as to costs.