ORDER
S. Kalyanam, Member (J)
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Bangalore dated 30-9-1991 confirming the order of the Assistant Collector of Central Excise, Mysore dated 27-3-1991 and rejecting the appellant’s claim for Modvat credit on printer ribbons used in relation to the manufacture of printers’ for Computers.
2. Shri Khunger, the learned Consultant for the appellant contended that there is a heavy dependence on the ribbons for the proper functioning of the printer and therefore on the basis of heavy functional dependence of the printer, the ribbon which is absolutely indispensable and without it the printer cannot function should be construed to be an input eligible for Modvat credit. It was further urged that the printer has no computational ability on its own and without the ribbon the printer cannot print or print out any. The ribbons are specially designed for exclusive use in conjunction with the printers and have no other use. It was further urged that the value of “Ribbon” is included in the assessed value of the printer by the Department for the purpose of excise duty and therefore on the same reasoning the “Ribbon” should be construed to be an input in the printer. It was also submitted that duty suffered by the printer is allowed for Modvat credit if the same is sold along with a computer as an integral part and therefore, it does not stand to reason as to how “Ribbon” could be excluded for eligibility to Modvat credit as an input if it is used in the printer.
3. Shri Jayaseelan, the learned D.R. submitted that the printer is only a consumable and does not go into the manufacture of the end product, viz. the printer and therefore would not be eligible for Modvat credit. The D.R. adopted the reasoning of the learned Collector (Appeals) in the impugned order in other respects.
4. We have carefully considered the submissions made before us. When the Bench specifically put a question to the learned Consultant with reference to the applicability of the ratio of the ruling of the Supreme Court in the case of State of Uttar Pradesh and Anr. v. Kores (India) Ltd., reported in 1977, Sales Tax Cases Vol. 39, page 8, the Ld. Consultant sought to distinguish the same and submitted that the question for consideration before the Supreme Court was as to whether a ribbon for the typewriter was a component part or accessory for purpose of U.P. Sales Tax Act (Act 15 of 1948). It was urged that initially the High Court of Mysore, in the case of State of Mysore v. Kores India Ltd., reported in 1970, 26, S.T.C. 87, took a view that ribbon is not an essential part of typewriter to attract tax within the mischief of the 2nd Schedule to the Mysore Sales Tax Act, 1957, as typewriters were being sold in the market without the type ribbons. The Allahabad High Court in a ruling dated 20-2-1970 which was appealed against and considered in the abovesaid ruling of the Supreme Court took a similar view. It was urged that the decision of the Supreme Court, affirming the views of the Mysore High Court and Allahabad High Court was based on the issues arising under the provisions of the Sales Tax Acts and questions as to how the goods were actually marketed and their marketability were primarily taken note of for the view taken by the Supreme Court. We are unable to accede to the submissions of the Ld. Consultant, because in our view the issue whether the ribbon is an input in relation to the manufacture of the printer will be squarely governed and covered by the ratio of the ruling of the Supreme Court cited supra. Affirming the views of the two High Courts the Supreme Court in Kores India Ltd. case cited supra has clearly held that ribbon is only an accessory and not a component part of a typewriter. The Supreme Court has observed as under :-
“Regarding ribbon also to which the above-mentioned rule of construction equally applies, we have no manner of doubt that it is an accessory and not a part of the typewriter (unlike spool) though it may not be possible to use the latter without the former. Just as aviation petrol is not a part of the aeroplane nor diesel is a part of a bus in the same way, ribbon is not a part of the typewriter though it may not be possible to type out any matter without it.”
The Ld. Consultant placed reliance on the ruling of the Special Bench in the case of Collector of Central Excise v. Allied Computers, Madras, reported in 1987 (31) E.l.t. 421. We find that the above ruling of the Supreme Court was not brought to the notice of the Special Bench and further the facts and the issue decided by the Special Bench are different from the issue arising for determination in the present case. Respectfully following the ratio of the Supreme Court, which in our view would apply on all force to the facts of the present case, we agree with the reasoning of the learned Collector (Appeals) in the impugned order and dismiss the appeal.
Sd/-
(S. Kalyanam)
Member
5. The short point in the proceeding is whether the ribbons which are used in the printer attached to the computers can be considered as an input for the purpose of Modvat credit under Rule 57 A of the Central Excises and Salt Act, 1944. The Ld. Consultant for the appellant pleaded that there is a heavy functional dependence on the ribbons for getting the output from the printer. He pleaded that the analogy of the typewriter with a printer may not be very apt as the typewriter as such can be used for the limited purpose of getting Stencils without the use of the ribbon. Printer cannot give its output which is in the form of a print-out without the ribbon. He conceded that no doubt the primary function of the typewriter is to type the material similar to that on the printer, but pleaded that since analogy is sought to be drawn between the typewriter and the printer for the purpose of applicability of the ratio of judgment of the Hon’ble Supreme Court, he wished to go on record for the limited purpose of stressing that the use of ribbon cartridge in the printer is an absolute must for making use of the printer. He further pleaded as it is the printers are marketed with the ribbon cartridge inserted in the unit and therefore going by the marketability criteria the use of the ribbon cartridge in the printer has to be considered in relation to the manufacture of the printer. On a query from the Bench he however clarified that so far as the typewriter and the printer are concerned functionally they are quite akin. He further took the plea that inasmuch as the value of the ribbon is included in the assessable value of the printer the same should be deemed to be a part of the printer. He pleaded that in law there is a nexus between Section 4 of the Central Excises and Salt Act, 1944 which deals with the assessable value of the goods for the purpose of excise duty and Rule 57A. He however did not elaborate as to how the parameters laid down under Section 4 could be read into Rule 57A. He also pleaded that the use in Rule 57A in respect of inputs is “in or in relation” to the manufacture of the specific finished product and that inasmuch as the use of the ribbon cartridge is in relation to the printer the benefit of Modvat credit should be allowed. His plea is that the term “in or in relation to” has wide import and should cover the use of the cartridge in the printer. He pleaded that the ruling of the Hon’ble Supreme Court which has been cited by the revenue against him in the case of State of U.P. and Anr. v. Kores (India) Ltd. reported in 1977, Sales Tax Cases Vol. 39, page 8, would come in the context of a taxation statute where the revenue authorities wanted to bring within the ambit of the levy the ribbon also for the purpose of levy of the tax. He pleaded inasmuch as under Rule 57A the words used are “in or in relation to” as pleaded above the ratio of the Hon. Supreme Court may not be applicable in the facts of this case as a wider meaning has to be given to the terms “in or in relation to” and all that the appellant has to show is a nexus between the use of the article and the finished product and the functioning of the same. He pleaded that the appellant would therefore be entitled to the benefit of Modvat Credit.
6. I observe in the context of Rule 57A, the Hon. Supreme Court in the case of Union Carbide v. CCE – 1989 (43) E.L.T. 286, Addisons & Co. Ltd. v. CCE -1990 (48) E.L.T. 281 and CCE v. Ballarpur Industries Ltd. – 1989 (43) E.L.T. 804, have held, so long as the items used are such which are necessary to put the goods in the market stream, the benefit of the proforma credit in regard to input used will have to be given. We observe in the context of the typewriter the Hon. Supreme Court in the case of Kores (India) Ltd., cited supra has clearly held that the ribbon used in the typewriter is an accessory and it may not be considered as a part of the typewriter. The inference that can be drawn from the above is that so far as the typewriter is concerned its manufacture is complete without the ribbon being fitted onto it. In the present case it is conceded that the use of the ribbon cartridge in the printer is similar to the use of the ribbon in the typewriter. The only inference that can be drawn based on the judgment of the Hon’ble Supreme Court cited supra is that the manufacture of the printer is complete without the ribbon being fitted onto it. The appellant’s plea is that they are marketing the printers with the ribbon fitted in the same. It is not the case of the appellant that the printer cannot be marketed without the fitment of the ribbons. As it is all that is required is, as explained to us during the hearing, that the ribbon cartridge is placed in position in the slot provided for the same and the printer then would be ready for the print-out on the paper. The position is similar to that in the case of typewriter as mentioned above. Keeping in view of the above I agree with my learned brother that the order of the learned Collector has to be upheld and the appeal is to be dismissed.