COMMR. OF C. EX. Vs. GAJRA GEARS LTD.

JUDGEMENT

(1.) The issue involved in these two appeals, filed by the Revenue, is regarding liability to Central Excise duty in respect of tools, cutters and hobs manufactured by M/s. Gajra Gears Ltd. and sent outside for tin coating under Rule 57F(4) of the Central Excise Rules, 1944 at the material time.

(2.) Mrs. Nita Lal Butalia, learned SDR, submitted that the respondents manufacture motor vehicle parts and tools and avail the facility of Modvat credit of the duty paid on inputs under Rule 57A of the Central Excise Rules; that the inputs for manufacture of tools is alloy steel bars; that the appellants had sent the tools for tin coating outside their factory premises without payment of duty under Rule 57F which is not applicable since the goods had already lost their identity as inputs or partially processed inputs; that further the tools were not in the nature of intermediate goods as they had already attained the essential characteristics as tools; that after return from the job workers the respondent had not subjected the tools to any other processing and had used the same as such. The learned SDR, further, submitted that the impugned tools are also not exempted under Notification No. 67/95 -C.E. as they have been cleared outside factory; that the provisions of Rule 57F(4) are also not applicable, and therefore, the duty is payable by them at the time of clearance of the tools to their job workers.

(3.) Countering the arguments Shri Mayank Holan and Ran Holani, C.A., submitted that Rule 57F(4) permitted removal of the inputs as such or after they have been partially processed by the manufacturer of the final product to a place outside his factory for testing, repair, refining, reconditioning or carrying out any other operation necessary for the manufacture of the final product or for manufacture of intermediate product necessary for the manufacture of final products and return the same to his factory within the specified period for further use in the manufacture of final products; that it is not necessary that some operation must be undertaken on the product after receipt from the job workers; that since after completion the impugned tools have been consumed within the factory in the manufacture of final product their claim for exemption under notification No. 67/95 is valid.