COLLECTOR OF CENTRAL EXCISE, CALCUTTAversusJAY ENGINEERING WORKS LTD.

A         COLLECTOR OF CENTRAL EXCISE, CALCUTIA
                                       v.
                   JAY ENGINEERING WORKS LTD.

                           NOVEMBER 28, 1988
B    [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]

          Central Excises and Salt Act, 1944-Section 35L(b) and Central
    Excise Tariff Item 68 and Notification No. 201/79-CE dated 4th June,
    1979...Affixation of name plates on fans-Whether dealer entitled to
    obtain proforma credit.
c
         The respondent is the manufacturer of electric fans. The company
   brought into Its factory nameplates under Tariff Item 68 of the Central
   Excise Tariff. The nameplates were affixed to the fans before market.
   ing them. The respondent claimed the benefit of proforma credit in
   terms of Notification No.201/79 dated 4-6-1979 which stated that all
D excisable goods on which duty of excise was leviable and in the
   manufacture of which any goods falling under Tariff Item No. 68 being
   'th~ inputs' bad been used, were exempt from so must of the duiy of
   excise leviable thereon was equivalent to the duty of excise already paid
   on the inputs. The respondent claimed the benefit of proforma credit
   for the goods l.e nameplates on the plea that the goods were Intended to
It be used as inputs in the manufacture of electric fans.

          The Asstt. Collector, Central Excise disallowed the proforma
    credit. The respondent preferred an appeal before the Collector (Ap-
    peals) Central Excise, and the same was allowed treating the said goods
    as inputs in terms of the June 1979 Notifications.
F
        The Department appealed to the Customs, Excise and Gold (Con-
  trol) Appellate Tribunal which held that even though electric fans could
  function without the nameplates, no electric, fan was removed from
  the factory for being marketed without the nameplates, as the amxatlon
  of the nameplate was considered an essential requirement from the
G point ofview of the Excise Tariff.

          The Department therefore filed an appeal under Section 35 L(h)
    of the Central Excises and Salt Act, 1944 before this Court.

          Dismissing the appeal, this Court,
H
                                                                                    -~


                COLLECTOR OF CE. v. JAY ENGG. [MUKHAR.ll, J.]            999

          HELD: 1. The Department's inst~uctions requiring every manu-
                                                                                A
"
    facturer to affix the nameplates·on the'fans, indicate that nameplate
    was an essential ingredient to complete the process of 'manufacture'
    for marketable electric fans. [lOOlE]

           2. The Tribunal was right In arriving at the conclusion that the
    nameplate was not a piece of decoration. Without the nameplates, the        B
    electric fans as such, could not be marketed; and that the dealer was
    entitled to the benefit of the Notification No. 201/79-CE for the purpose
    of obtaining proforma credit. [lOOlF-G]

          3. Fans with nameplates, have certain value which the fans with-
    out the nameplates, do not have. If that be so, then the value _added for
    the accretion of nameplate was entitled to proforma credit in terms of
                                                                                c
    the said notification. It is true that an electric fan may perform Its
    essential functions without aflbation of the nameplate, but that is not
    enough. Electric fans do not become marketable products without
    affixatlon of nameplates. [lOOlG-H]
                                                                                D
          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1630
    of 1988.

         From the Judgment and Order dated 21.1.1988 of the Customs,
    Excise and Gold (Controi) Appellate Tribunal, New Delhi in Appeal
    No. 2321/83-BI in Order No. 18/1988 'B'.                                    E

         G. Ramaswamy, Additional Solicitor General, K. Swami and
    Mrs. Sushma Suri for the Appellant.

            RavindeL Narain, P.K. Ram and D.N. Misra for the Respon-
    dent.                                                                       F

            The Judgment of the Court was delivered by

          SABYASACHI MUKHARJI, J. This is an appeal against the
    decision and order of the Customs, Excise and Gold (Control) Appel-
    late Tribunal under Section 35L{b) of the Central Excises and Salt (}
    Act, 1944 {hereinafter called 'the Act').

           The respondent is the manufacturer of electric fans, and brought
    into its factory nameplates under tariff item 68 of the erstwhile Central
    Excise Tariff. The nameplates were affixed to the fans. before market-
    ing them. The respondent daimed the benefit of profo_rma credit in H
                                                     [ 1988] Supp. :i S.C.R.

                                                                                   I
    1000        SUPREME COURT REPORTS
                                                                                   .
A   terms of Notification No. 201/79 dated 4th June, 1979, which was for
    the -purpose of relief on the duty of excise paid on goods falling under
    Tariff Item 68, when these goods are used in the manufacture of other
    excisable goods. The said notification stated in supersession of the
    notification No. 178/77 of the Central Excise, dated 18th June, 1977,
    all excisable goods on which duty of excise is leviable and in the
B   111anufacture of which any goods falling under. Item No. 68 (hereinafter
    referred to as 'the inputs') have been used; are exempt from so much
    of the duty of excise leviable thereon as is equivalent to the duty of
     excise 'already paid on the inputs.


            It enjoins that the procedure set out in the Appendix should be
c     followed; and further that nothing contained in the said notification
    · shall apply to the said goods which are exempted from the whole of the
      duty of excise leviable thereon or are chargeable to nil duty.

           It further stipulated that the credit of the duty allowed in respect
D    of the inputs shall not be denied or varied on the ground that part of
     such inputs is contained in any waste, refuse or by-product arising
     during the process of manufacture of the said goods irrespective of the
     fact that such waste, refuse or by product is exempt from the whole· of
     the duty of excise leviable thereon or is chargeable to nil rate of duty,
     or is not mentioned in the declaration -referred to in the Appendix to
E    this notification. Provided, also that nothing contained in any notifica-
     tion should apply to the said goods on which duty of excise is paid
     through bandrols.


           The Appendix provides the procedure. The benefit of proforma
     was claimed for the said goods on the plea that the goods were
F
     intended to be used (as inputs) in the manufacture of electric fans. The
     Asstt. Collector, Central Excise, Calcutta-XV Division, disallowed
     proforma credit to the said geods on the ground that nameplates are
     not essential ingredients or raw-materials in the manufacture of
     finished-goods i.e. electric fans and thus cannot' be considered as
     inputs in terms of the notification No. 201/79 dated 4.6.1979.
G

           The respondent preferred an appeal against the decision before
     the Collector (Appeals) Central Excise, Calcutta, and the same was
     allowed holding, inter alia, that para 8 of the supplement to the manual
     of Departmental instructions on electric fans, has clarified the utility of
H    the use of "nameplate" on eleectric fan and, hence, viewed from this
          COLLECTOR OF C.E. v. JAY ENGG. [MUKHARJI, J.]             1001

angle, the said goods should be treated as 'inputs' in terms of the A
notification No. 201/79 dated 4th June, 1979.

      The Collector, therefore, set aside the order of the Asstt.
Collector. There was an appeal to the Tribunal. The Tribunal in its
order noted that the short point requiring decision in this case was:
                                                                         B
whether the nameplate could be considered as component part of the
electric fan, so as to be eligible for proforma credit under the exemp-
tion notification. The Tribunal further noted that no electric fan was
removed from the factory for being marketed without the nameplate.
The Tribunal also noted that even though it could be said that electric
fans could function without the nameplates, for actual marketing of the
fan, the affixation of the nameplate was considered as ess_ential c
requirement. The Tribunal further noted that it was an essential
requirement even from the point of view of the Excise Tariff because
the rate of duty on different types of electric fans, depended on their
variety and the sweep size of the fan. This information was given in the
nameplate only.
                                                                         D

      It appears that the Department's own instructions in their Com-
modity Manual made it obligatory for every manufacturer to affix the
nameplates on the fans. In those circumstances, namely, for marketing
the nameplates, these were essential. In other words, they could not
be marketed without the nameplates. The relevant particulars of the         E
fan for the determination of duty, depended on the particulars which
are contained only in the nameplates. The Department's instructions
requiring every manufacturer to affix the nameplates on the fans,
indicate that nameplate was an essential ingredient to complete the
process of manufacture for marketable electric fans.
                                                                             F
      In those circumstances, in our opinion, the Tribunal was right in
arriving at the conclusion that the nameplate was not a piece of
decoration without the nameplate, the electric fans as such, could not
be marketed; and that the dealer was entitled to the benefit of the
notification No. 201/79-CE for the purpose of obtaining proforma cre-
dit. Fans with nameplates, have certain value which the fans without G
the nameplates, do not have. If that be so, then the value added for the
accretion of nameplate was entitled to proforma credit in terms of the
said notification. It is true that an electric fan may perform its essential
functions without affixation of the nameplate, but that is not enough.
Electric fans do not become marketable products without affixation of
nameplates.                                                                  H
    1002         SUPREME COURT REPORTS               [1988] Supp. 3 S.C.R.
A
          In that view of the matter, it appears to us that the Tribunal
    followed the correct principles applicable in this case. All the relevant
    and material factors were taken into consideration. The approach of
    the Tribunal was right. The decision arrived at on that basis appears to
    be correct.
a
           In the premises the appeal fails and is accordingly dismissed.

    S.K.A.                                                 Appeal dismissed.