ORDER
Lajja Ram, Member (T)
1. This is an appeal filed by M/s. Orient Steel & Industries Ltd. being aggrieved with the order-in-appeal dated 14-12-1984 passed by the Collector of Central Excise (Appeals), Calcutta.
2. The matter relates to the excisability of the products like Buffer Casing, Buffer Plunger, Pivot Top, Pivot Bottom, Loco Plunger, Loco Casing, C.B. Couplers and Components. The issue for consideration is whether these products are dutiable under Item No. 68 after initially the duty had been paid under Item No. 25(16)(ii) of the erstwhile Central Excise Tariff. The appellants had contested that they are engaged in the manufacture of castings and the process undertaken by them were incidental and ancillary to the process of casting. The Revenue had taken the view that after casting and after discharging that stage duty, the goods were further processed to make them identifiable parts for use by Railways. According to the Revenue two stage duty is payable : first at the casting stage under Item No. 25 and thereafter under Item No. 68 as goods not elsewhere specified.
3. The matter was heard on 15-05-1996, when Shri A.K. Jain, the learned Advocate appeared for the appellants. Shri G.D. Sharma, the learned JDR represented the Respondents /Revenue.
4. Shri A.K. Jain, the learned Advocate stated that they were engaged in the production of cast products and the process of machining and polishing was incidental and that no new product commercially known differently than from the cast products had come into existence. He relied upon the Calcutta High Court’s decision in the case of Gonterman Peipers (India) Ltd. v. Additional Secretary of the Government of India – 1986 (26) E.L.T. 471 (Cal.). The reliance was also placed on the Patna High Court’s decision in the case of TISCO v. Collector of Customs – 1983 (13) E.L.T. 1113 (Tribunal).
5. In reply, Shri G.D. Sharma, the learned JDR referred to the findings of the learned Collector of Central Excise (Appeals) and particularly mentioned that the products at the clearance stage were a ready-made component for the Railway Wagon. He stated that in the form the goods were cleared, they were not casting product but an identifiable part ready for use. He submitted that as the process undertaken were specific to the goods which were supplied to the Railways and had been made as per their specifications, second stage duty under Item No. 68 was correctly levied.
6. We have carefully considered the matter. It is seen from the classification list in the paperbook that the goods were manufactured as per Railway designs and specifications and that the goods were identifiable by their name, designs and specifications. The appellants had submitted a classification and have shown classification of their products under Item No. 25 of the Central Excise Tariff. The Assistant Collector classified the products first as under Item No. 25 and then under Item No. 68. Being aggrieved the appellants had filed an appeal with the Collector of Central Excise (Appeals), Calcutta who had remanded the matter to the Assistant Collector for physical examination over and above the perusal of the records. Thereafter the Assistant Collector visited the premises of the assessee and studied the manufacturing process. He found that after castings the goods were subjected to various processes in order to confirm to the specifications, designs and drawings of the customer. He had held as under :-
“I have also seen the manufacturing process of the products in their factory. The goods are first manufactured by the process of casting and thereafter they undergo a number of operations before being ready for fitment to the machinery or with the Railway Wagons for which they are made.”
He had mentioned that after casting operations various processes like short blasting, grooving, boring, etc. are made. He classified the products under Item No. 25 at the casting stage and then Item No. 68 at the finished stage.
7. The learned Collector of Central Excise (Appeals), Calcutta examined one sample of the product in question and found that the goods machined had several holes for tightening with bolts and nuts and that the goods were described in the Bill made to the customer as “C.S. Back stop to drawing No. W/BD-699 conforming to specification as specified in the drawing”. He also examined some other Bill in this regard and held as under :-
“From the sample of the rough casting as well as the casting after machine shown by the appellants on 13-12-1984 it is clear that the product is, at the clearance stage, a ready-made component of the Railway Wagon. Apart from that the finished product has a smooth surface, a number of holes were also made for fitting bolts and nuts for the purpose of tightening to the Wagon at the place require. In the Bills also the goods as cleared were described as C.S. “Buffer Plunger” and C.S. “Back Stop”. Therefore, casting is the preliminary stages of preparing the finished product. The decision of the Assistant Collector that the products are correctly classifiable under Item 68 at the finished stage is therefore, correct. The appeal is therefore, stands rejected.”
8. The learned Advocate had referred to the decisions which have been mentioned above. The law is well settled that if any process which is incidental and ancillary to the process of casting is undertaken then the cast goods will not go out of purview of Item No. 25. When the cast item is taken out of mould there are some foreign material attached to the casting. They had necessarily to be removed before the cast goods are supplied to the customers. Upto that stage, the goods are not again classified under Item No. 68; thereafter to make the goods usable as a part of the machinery for the working of the machinery will depend upon the specifications of such parts. It is only when the cast product is subjected to such process that it was again excisable as a part of the machinery. During the relevant time Item No. 68 was on the statute book and the finished parts were excisable and dutiable under that item. The initial product could be a cast product or the forged product. The Hon’ble Supreme Court in the case of Tata Iron and Steel Co. Ltd. v. Union of India – 1988 (35) E.L.T. 605 (SC) had held that when the goods are in rough machined condition, they were excisable under Item No. 26AA (it was a case of forged products) and on completion of the manufacture of the finished goods under Item No. 68 of the Tariff. In that case the Railways had submitted that they were precision machining the rough forged products received from TISCO at their own workshop before being put to use. The Hon’ble Supreme Court held that the finished goods namely, finished wheels, tyres, axles and blanks could be said to have come into existence only after the precision machining and other processing at the Railways workshops were completed and that in respect of composite units the duty was chargeable under Item No. 26AA as well as under Tariff Item No. 68. The Hon’ble Supreme Court has observed that the machining and polishing done to remove excess surface skin will not take the goods out of the purview of forged because such machining and polishing is incidental or ancillary to the manufacture of the forged products as per Section 2(f) of the Central Excises and Salt Act, 1944. The learned Advocate had stated that it was a case where the position has been conceded by the appellants. We, however, consider that the Hon’ble Supreme Court had gone into the merits and have given to their independent decision that in a case where rough machined casting are subjected to precision machining then two stage duty, first as casting and then under Item No. 68 was leviable.
9. There is nothing on record to show that the goods as supplied were further processed by the customers to make them usable for their purpose. In fact, the learned Collector of Central Excise (Appeals) had seen the sample and have recorded a finding that the product was “ready-made component of the Railway Wagon”. The Assistant Collector had also visited the factory and had recorded the findings of facts. In fact, in the statement of facts party had also admitted that their products are tailor-made items for individual customers as per the customer’s specification, designs and drawings and against specific orders. As in this case the goods were ready for use and there is nothing on record to show that any further process was undertaken by the customers, we consider that at the finished stage, the goods were correctly classifiable under Item No. 68 in addition to the duty liability under Item No. 25 at the casting stage.
10. Taking all the relevant considerations into account, we do not find any merit in this appeal and the same is rejected.
11. Ordered accordingly.