ORDER
K. Sankararaman, Member (T)
1. These two appeals have been filed by M/s. Triupati Granites (P) Ltd. against a common Order-in-Appeal bearing No. R-964-965/BD-241-242/87 dated 17-3-1988 passed by the Collector of Central Excise (Appeals), Bombay in terms of which he had rejected their two appeals challenging two Orders-in-Original dated 22-6-1987 and 21-7-1987 passed by the Assistant Collector of Central Excise, Div-I, Baroda. By his said orders, the latter had held, inter alia, that they were not eligible for the benefit of exemption Notification No. 77/85 dated 17-3-1985 as the capital investment on plant and machinery exceeded Rs. 20 lakhs. He had arrived at the said conclusion on the ground that the cost of machines was Rs. 17,63,600.68, Electrical Panels Rs. 43,574.35 and Spares Rs. 1,88,060.59 which aggregated to Rs. 21,95,235.92. The Collector (Appeals), while disposing of the appeals filed before him, had accepted their plea for the exclusion of the cost of spares but had negatived their plea for the exclusion of the value of the electrical panels. The Collector held that these are essential parts of the plant and machinery and that after excluding the cost of the spares, the value of plant and machinery still came to over Rs. 20 lakhs. He had, therefore, upheld the orders of the Assistant Collector,
2. Shri Willingdon Christian, learned Counsel for the appellants, argued the matter on their behalf during the hearing. He referred to the contentions raised in their appeal memorandum and stressed the point that as clarified by the Industries Commissioner of the State Government (Gujarat), Control Panel Boards and other electrical installation and cabling are to be excluded while arriving at the value of plant and machinery installed for deciding the question whether the industrial unit is a Small Scale Industry or not. He handed over copies of the following decisions in support of his plea that the cost of electrical panel should be excluded and that the opinion of the Industries Department of the State Government should be accepted.
(1)
Ahmedabad Chemical (P) Ltd. v. Collector of Central Excise, Baroda – 1984 (3) E.T.R. 755
(2)
Collector of Central Excise, Madurai v. Maharaja Paper Board (P) Ltd. – 1985 (6) E.T.R. 645
(3)
Collector of Central Excise v. General Cement (P) Ltd. -1989 (39) E.L.T. 76
(4)
Indian Barytes & Chemicals Limited v. Collector of Central Excise, Hyderabad – 1990 (50) E.L.T. 196 (Tri.)
(5)
Bombay Chemicals (P) Ltd. v. Appellate Collector of Customs – 1990 (49) E.L.T. 190 (Bombay)
3. The learned Counsel pleaded that on the basis of the ratio laid down in these decisions and the instructions of the Industries Commissioner, Government of Gujarat vide his letter dated 28th October, 1978 issued to the District Industries Centres in that State, the value of plant and machinery should be arrived at after excluding the cost of electrical panel, in which event the total cost of plant and machinery would be below Rs. 20 lakhs rendering themselves eligible for the benefit of the relevant exemption Notification viz. Notification No. 77/85. He concluded his arguments with the plea that their appeals may be allowed with consequential reliefs.
4. The arguments were strongly opposed by Shri L.N. Murthy, learned Depart mental Representative. He submitted that the case laws cited do not apply to the facts of the present cases. Illustrating this point, he stated that in the Ahmedabad Chemical (Private) Ltd. case cited by the appellants, the question for decision was whether expenses like installation, erection, transportation charges, technical know-how fees and other incidental expenses are includible or not in the computation of value of plant and machinery. No such question has arisen in the present case. Likewise, the Maharaja Paper Board matter also dealt with the question of transport charges, erection charges etc. The other cases are also similarly not relevant to the present matter. Unlike these cases, the issue in the present case is the includibility of the cost of electrical panels. Shri Murthy pointed out that from the list attached to the Order-in-Original (Annexure A thereto) it could be seen that the cost of these electrical panels are shown in respect of various machines like “Polishing machine, Bevelling machine, Cross-cutting machine, Multi Disk Strip marking machine. This would go to show that these panels are to operate these particular machines. The Collector (Appeals) has correctly held that the cost of these panels are to be included in the cost of plant and machinery as they are essential parts of these machines. Shri Murthy, therefore, pleaded that the impugned order be upheld and the appeals dismissed.
5. We have considered the submissions made by both the sides. We have gone through the record. We have perused the case law cited by the learned Counsel for the appellants. We find that, as correctly pointed out by the learned Departmental Representative, the thrust of these decisions is on the excludibility of various charges like erection charges, technical know-how fees, transportation expenses, cost of generating sets and moulds. The items which are the subject of controversy in the present appeals are not of the above-mentioned type and the matter has to be decided without reference to the said decisions. In
Bombay Chemicals Pvt. Ltd. v. Appellate Collector of Customs -1990 (49) E.L.T. 190 (Bom.)
, the Bombay High Court had held that the Customs authorities have no jurisdiction to sit in appeal over the certificates which have been granted by D.G.T.D. or Director of Industries and come to their own conclusion.
6. The certificate produced in the said case was to the effect that the chemicals imported were required for the manufacture of insecticides, fungicides and weedicides and that these were not produced in India. It was held that such a certificate cannot be sat over in judgment by the Customs Department. In the present case, no certificate has been produced for the plant and machinery installed in the factory of the appellants. The photocopy of the relevant extracts from the Book entitled “Planning an Industrial Unit” by Shri Jay Narayan Vyas has been produced. In the Chapter on Small Scale Industry, on the question what counts in the cost of plant and machinery, against Serial No. (i) it is stated that Control Panel Boards and other electrical installations and cabling are to be excluded. However, we find that in the very same material, against (n) and (o) it is stated that the cost of cables and permanent wiring which are necessary for imparting power to the plant and machinery should be included for computing the value of investment in plant and machinery but that wiring used in lighting and running of fans etc. may be excluded. Also it is stated that the cost of electrical installation and water supply lines which are used for productive purpose will have to be included. This extract had been made available by the appellants during the proceedings below and has been relied upon by them to support their contention that the cost of electrical panels should be excluded in arriving at the value of plant and machinery. What are referred to in the said Publication as eligible for exclusion in arriving at the cost of plant and machinery are Control Panel Boards. What are covered in the adjudication order are electrical panels associated with various specified machines. In the literature made available by the appellants and relied upon by them for their stand in the appeal, there is contradiction between what is stated at Serial Number (I) and the ones at Serial Numbers (n) and (o). There is a further observation later on, as pointed out above, that the cost of electrical installation and water supply lines which are used for productive purpose will have to be included. Taking an overall view of what is stated in the reference material cited by the appellants and taking note of the fact that the cost of the impugned electrical panels are shown in respect of various machines like Polishing machine, Bevelling machine etc. go to show that these are linked to these machines and are required for operating them. In the circumstances, the decision of the Collector (Appeals) treating them as essential part of the plant and machinery cannot be faulted. We see no merit in the appeals. We, therefore, dismiss them.
7. The operative part of the order was pronounced in the open Court at the conclusion of the hearing.