UNIVERSAL FILTRATION CO. Vs. COLLECTOR OF C. EX.

JUDGEMENT

(1.) THE issue involved in this appeal filed by M/s Universal Filteration Co. is whether the filter heads and filter elements were manufactured by them and Central Excise Duty was chargeable from them.

(2.) SHRI B.K. Kulkarni, ld. Chartered Accountant, submitted that the appellants are manufacturing lube oil filter assembly which consists three parts, namely, filter heads, filter elements and oil shell; that they manufacture aluminium castings for filter heads and then send the same to various processors for machining; that the appellants are not the manufcturer of filter heads; that unmachined castings for filter heads are exempt from payment of duty under Notification No. 180/88 -C.E., dated 13 -5 -1988. He, further, submitted that for manufacture of filter element, they procure raw materials like sheet metal and filter paper etc. from market; that these raw materials are sent to job workers for manufacturing filter elements; that third part, oil shell is purchased from the market; that as they were not manufacturing filter elements, no duty was payable by them; that the Department had failed to establish the fact about manufacture of filter heads and filter elements by the appellants. Finally he submitted that both the impugned products are used by them in the manufacture of lube oil filter assembly which is exempt from payment of duty under Notification No. 217/85 -C.E., dated 8 -10 -1985 as the same was used in the manufacture of diesel operated internal combustion engine; that filter heads and filter elements are parts of parts of diesel operated. I.C. Engines and as such are also exempt from payment of duty under Notification No. 217/85. He placed reliance on the decision in the case of C.C.E, v. Mahendran Engineering Works [1993 (21) ETR 775] wherein the benefit of exemption No. 64/86 was extended to stampings and laminations as these were used in the electric motors/rotors/stators which in turn were used in the manufacture of power driven pumps; being parts of the parts of power driven pumps.

(3.) COUNTERING the arguments, Shri. R.K. Sharma, ld. SDR, submitted that both the impugned products were manufactured on behalf of the appellants by the hired labour; that there was no dealing with the persons who manufactured these goods in question on principal to principal basis; that some manufacturing operations were carried out by these persons by paying labour charges which is evident from the invoices of M/s. Jay Chamunda Mechanical Works, Mumbai which have been issued only for labour charges. He also reiterated the findings of the Collector in the impugned order, according to which machining of casting does not alter the essential character of casting and the filter heads remain to be filter heads. Regarding filter element also he reiterated Collector's findings to the effect that the appellants had not adduced any evidence that the goods were received from other manufactures; that permission under Rule 51A of the Central Excise Rules for bringing filter elements into factory was not obtained as they were manufacturing identical goods, i.e. Filter Disc. He finally submitted that the ratio of the decision in Mahendran Engg.'s case, supra, is not applicable as the facts are different inasmuch as rotor/sta tors were integral part of power driven pumps whereas the Lube Oil Filter Assembly is not an integral part of I.C. Engine; that further Notification No. 217/85 excludes filter elements from the purview of exemption.