JUDGMENT
Jeet Ram Kait, Member (T)
1. These three appeals filed by the Revenue are directed against Orders-in-Appeal No. 1100/94 (MDU) dated 25.11.94,27 & 28/95 (MDU) dated 17.4.95 passed by the Collector of Customs and Central Excise (Appeals) Trichy by which he has allowed the appeals filed by the assessee with consequential relief. The original authority had held that duty is demandable on the bells drawn as samples in excess of three metres in length for technical test. The issue involved in all these appeals are same and hence all these appeals and the cross-objections were taken up together for disposal according to law,
2. The brief facts of the case are that the respondents assessees are manufacturers of V & Fan belts falling under chapter heading 40 of the schedule to the Central Excise Act, 1985. At the relevant time viz, 1/92 to 12/92, they were eligible to draw samples of the said goods not exceeding 3 metres in length free of duty for technical test purposes in terms of SI. No. 2 of the Table to Notification No. 184/72 CE dated 12.8.72 as amended subject to certain conditions. On verification of the finished product testing register, it was noticed that they had at times drawn such samples exceeding three metres in length for such test. In the circumstances show cause notice was issued demanding duty and the show cause notice culminated in the order of adjudication passed by the Assistant Collector demanding duty on the belts drawn as samples in excess of three metres in length for technical test, under Section 11A of the CE Act 1944. On appeal before the Collector (Appeals), the appeals were allowed with consequential relief. Aggrieved by the said order in appeal, the Revenue has come in appeal on the following grounds:
(1) The said belts are complete and are excisable goods before the test was done. The exemption of duty for the samples drawn for test purposes is also provided by Notification No. 184/72 as amended. The exemption is subject to satisfaction of the following conditions:
(a) drawn for technical test — not more than 3 metres in length.
(b) drawn for performance test — not exceeding 7.6 metres in length.
(2) Since the assessee has drawn more than 3 metres in length for technical test, they have not satisfied the condition of the notification and hence they are liable to pay duty for the samples drawn in excess of 3 metres.
(3) The belts drawn as samples are known only as ‘belts’ and not otherwise. Further the process of coding, dyeing, trimming etc. does not in any way bring about any change in the transformation and identity of the said belts. The mere fact that the belts are made available to market after the said further operations does not render the belts as semi-finished and non-mar-ketable goods.
(4) The plea taken by the assessee that the belts drawn for tests ^re defective is devoid of merits since the test of bonding evenness of various elements in the belts said to be undertaken may not prove worthy of defective belts.
3. Shri C. Mani, learned JDR appearing for the Revenue reiterated the grounds taken by the Revenue and prayed for allowing the Revenue appeals.
4. Shri R. Raghavan, learned Counsel appearing for the Respondents-assessee referred to the grounds taken in the Cross objections filed by the respondents and submitted that the belts can be marketed only after the test is completed, to assess the suitability of the goods for marketing. The belts which are put to test cannot be marketed. He has also submitted that the belts even at the time of being drawn for tests had the essential characteristics of fully manufactured belts and hence the appellants thought it fit to claim exemption under Central Excise Notification No. 184/72. He has also referred to the finding portion of the impugned order wherein the Commissioner (Appeals) has reached a conclusion that even if the V-belts are held to be excisable, they are entitled to remission of duty in terms of second proviso to Rule 49 of the CE Rules, 1944. He therefore, prayed for rejection of the Revenue appeals.
5. We have considered the submissions made by both the sides and gone through the case records. The issue that arises for determination in all these appeals is whether duty is demandable in respect of the belts which were taken for technical test in case the length of the belt taken is in excess of 3 metres as provided for in the Notification No. 184/72 dated 12.8.72 and whether the assessee-respondents are eligible for duty remission in terms of the second proviso to Rule 49 of the CER, 1944. The Revenue has relied upon the decision of the Tribunal in the case of D.S. Screen Pvt Ltd. v. CCE, 1990 (50) ELT 475, wherein it was held that the goods were completely manufactured as soon as the manufacturing process was over, irrespective of examination/testing etc. by the purchaser. Further we note that the Hon’ble Supreme Court in the case of ITC Ltd. v. CCE, Patna, 2003 (85) ECC 1 (SC) ; 2003 (151) ELT 246 (SC) has clearly held that manufacture of cigarette is completed when the same emerges in the form of sticks of cigarettes which are sent to the laboratory for quality control test. It was further held that manufacture of cigarette which is commercially known in the market as such, is completed before its removal for test and after testing, only packing of the same which is the requirement of Rule 93 of the erstwhile CE Rules, 1944 is done. Therefore it was held by the Apex Court, that sticks of cigarettes removed prior to the packing for quality control rest are liable to duty. In the instant case also, we observe that only a portion of the fully manufactured V-belt, i.e. exceeding three metres is taken for quality control test before the belt was put to market for sale and duty was demanded on that portion which exceeded the stipulated length. Therefore, in any event, it cannot be said that belt was not fully manufactured, before it was put to test. The assessee has also filed classification list classifying the goods as “belts” under sub-heading 4010.90 and claimed exemption for the samples drawn for test purposes from payment of duty under Notification No. 184/72. We note that the exemption contained in the said Notification is subject to satisfaction of the conditions such as (i) the belt drawn for technical (sic) [technical test] should not exceed 3 metres in length and (ii) belt drawn for performance test should not exceed 7.6 metres, for the purpose of enjoying the benefit of exemption. The Original authority has demanded duty only in respect of that portion of the belts drawn for test which exceeded three metres in length. He has thus gone by the exact wording of the Notification. When the Legislature in its wisdom has decided to stipulate a particular length of belt for the purpose of technical testing, by issue of a Notification, the Tribunal cannot go beyond the scope of the Notification. There has to be some yardstick as to how much length can be given duty exemption for the purpose of technical testing and that is what the Notification has stipulated and when the fixed length drawn for testing purposes exceeded the limit laid down, the assessee cannot be held to be eligible for exemption. It is well settled that a Notification has to be interpreted strictly according to the words employed therein. Therefore, so far as demand of duty on the belts which is drawn as sample in excess of 3 metres is concerned, we are of the considered view that the Assistant Commissioner was right in demanding duty and his order cannot be found fault with in regard to dutiability of the goods exceeding stipulated length is concerned.
6. Now coming to the other point, whether the assessee would be eligible for remission of duty in terms of the second proviso to Rule 49 of the CER, 1944, we observe that the assessee-respondents have taken the plea that belts which are put to test cannot be marketed as the tests carried out are destructive tests. They have not placed any evidence in support of their plea in this regard by way of any account in relation to the destruction of V-belts during the course of quality control test. It is not their case either that they have assigned any reason for not doing so either before authorities below or before us. In any case what is more relevant is whether the commodity, viz. belt which is commercially known in the market as ‘belt’ emerged before the test was undertaken or not. No doubt, in the instant case, the answer is in the affirmative. The appellants have taken a plea that as held by the Commissioner (Appeals), even if V-belt which was taken for technical test is considered to be fully finished, still in terms of the proviso to Rule 49 of the CE Rules, 1944, the assessees are eligible for remission of duty. We observe that in terms of the second proviso to Rule 49, the proper officer may not demand duty due on any goods claimed by the manufacturer as unfit for consumption or for marketing subject to certain condition. In the instant case it is not the case of the assessee that V-belt as such manufactured by the assessee and which was commercially known as V belt before testing was done, was not fit for consumption or marketing. Therefore, the situation as covered by Rule 49 and the second proviso thereto is completely different, Therefore, in our view, the Commissioner (Appeals) was not right in holding that even if V-belts are held to be excisable, they are entitled to remission of duty in terms of second proviso to Rule 49. We are of the considered opinion that the ratio of the judgment of the Hon’ble Apex Court in the case of ITC Ltd. (supra) is squarely applicable to the present case and respectfully following the ratio therein, we set aside the orders impugned and allow all the three appeals filed by the Revenue. The cross objections filed by the assessee-respondents also stand disposed of accordingly.