ELSON MACHINES (P) LTD. versus COLLECTOR OF CENTRAL EXCISE

Citation: [1988] SUPP. 3 S.C.R. 878 · Decided: 15-11-1988 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

A 
B 
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D 
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ELSON MACHINES (P) LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE 
NOVEMBER 15, 1988 
[R.S. PATHAK, CJ AND RANGANATH MISRA, J.] 
Central Excise Rules, 1944-R. 8( 1) -Exemption from duty 
granted under Notification No. 80/80/+C.E. dated 19-6-1980-Whether 
captive consumption of specified goods within the factory for manufac-
ture of specified goods falling under a different item can be excluded 
while determining the clearance value. 
As a measure of concession to small-scale manufacturers, Notifi-
cation No. 80/80-C.E. dated 19-6-1980 issued under r. 8(1) of the 
Central Excise Rules, 1944 exempted from duty certain excisable goods 
and, paragraph 2 thereof stipulated inter a/ia that the concession would 
not be available to a manufacturer if the aggregate value of clearances 
of the specified goods by him for home consumption during the preced-
ing financial year had exceeded Rs.IS lakhs. Explanation V thereto 
provided t.hat where any specified goods were used within the factory of 
p!'oduction for further manufacture of any other specified goods and, 
where both the former and the latter categories of specified goods fell 
under the same item of the First Schedule to the Central Excises and Salt 
Act, 1944, the clearances of the former category of specified goods shall 
not be taken into account for calculating the aggregate value of clea-
rance under the notification. 
The appellant which was engaged in the business of manufactur-
F 
Ing and selling electric motors, availed of the aforesaid exemption for 
the periods 1-4-1980 to 30-11-1980 and 1-4-1981 to 30-9-1981. The 
Excise Authority issued a demand for payment of duty on the ground 
that its clearance exceeded the limit of Rs. IS lakhs. On appeal, the 
demand for the period 1-4-1980 to 30-II-1980 was set aside .but the 
demand for the period 1-4-1981 to 30-9-1981 was sustained. On further 
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appeal, the Appellate Tribunal observed that !'or the year 1980-81 the 
appellant had disclosed a clearance of Rs.13,43,443.SS on account of 
electric motors for home consumption and Rs.6,51,138.50 on account of 
electric motors "for captive consumption" in the manufacture ofmono-
block pumps. The Tribunal held that while electric motors were 
mentioned under Tariff Item 30, power driven pumps were ,specified 
H u.ndcr Tariff Item 30-A; and therefore, the electric motors captively 
878 
ELSON MACHINES v. COLLECTOR OF C.E. !PATHAK, CJ.] 
879 
consumed as inputs in the manufacture of power driven pumps could A 
not be excluded, The further co.ntention that the appellant had mista-
kenly stated that electric motors had been used for monoblock pumps 
whereas only rotors and stators which were integral components of 
monoblock pumps had been used and therefore the same Tariff Item 
was attracted entitling it to the concession was also rejected by the 
Tribunal, 
B 
Dismissing the appeal, 
HELD: The contention that the goods in question could not be 
said to have been cleared from the factory since they were employed in 
the manufacture of monoblock pumps within the factory itself has no C 
force, As soon as the manufacture of the goods was completed they must 
be regarded as goods available for clearance from the factory, and there 
is nothing to show that when fitted into monoblock pumps they were not 
removed to another part of the factory for that purpose. The process of 
manufacture of those goods is distinct, separate and complete in itself 
and at the end of the manufacturing process, the goods in question D 
represent a completed product, l882E-F J 
Whether the goods in question were rotors and stators and 
whether they formed integral components of monoblock motors is a 
question of fact considered and concluded by the Tribunal and it cannot 
be entertained at this stage. [882B] 
E 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 603 
of 1985. 
From the Judgment and Order dated 27 .8.1984 of the Customs 
Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal F 
No. 1711/83-B in Order No. 643/84-B. 
Dushyant Dave, R. Karanjawala and Mrs. Manik Karanjawala 
for the Appellant. 
G. Ramaswami, Additional Solicitor General, N.S. Das Bahl G 
and Ms. S. Relan for the Respondent. 
The Judgment of the Court was delivered by 
PATHAK, CJ. This appeal is directed against the judgment 
and order of the Customs, Excise and Gold Control Appellate H 
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D 
880 
SUPREME COURT REPORTS 
[1988] S\lpp. 3 S.C.R. 
Tribunal on the question whether the appellant is djsentitled

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