H.M.M. LIMITED versus THE COLLECTOR OF CENTRAL EXCISE

Citation: [1994] SUPP. 4 S.C.R. 13 · Decided: 23-09-1994 · Supreme Court of India · Bench: R.M. SAHAI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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H.M.M. LIMITED 
A 
v. 
THE COLLECTOR OF CENTRAL EXCISE 
SEPTEMBER 23, 1994 
[R.M. SAHA! AND N.P. SINGH, JJ.] 
B 
Central Excise Rules, 1944 : 
Rule &-Notification No. 201/79-CE-Exemption-Benefit of Screw Cap 
of Horlicks-Held: It is component part of the finished product Horlicks and C 
therefore entitled to the benefit of the Notification. 
Under Rule 8 of the Central Excise Rules, 1944, Notification No. 
178177 ·CE dated 18.6.1977 was issued granting general exemption of duty 
in respect of excisable goods on which excise duty was leviable and in the 
manufacture of which any goods falling under Tariff Item No. 68 of the D 
First Schedule to the Central Excises and Salt Act, 1944 have been used 
from so much of duty of excise leviable thereon as equivalent to the duty 
of excise already paid on the inputs. Notification No. 201/79-CE was 
published on 4.6.1979 laying down the procedure for availing the set off. 
The appellant company claimed that the metal screw caps used on 
the bottles that contain the product Horlicks were component parts of 
Horlicks and therefore quality for the said exemption. The Collector 
(Appeals) upheld the claim of the appellant. But the Customs, Excise & 
Gold (Control) Appellate Tribunal by its majority judgment reversed the 
order of the Collector (Appeals). Hence the appeal by the appellant com· 
pany. 
Allowing the appeal, this Court 
E 
F 
HELD : 1. From a bare reference to the Notification No. 201179-CE G 
it appears that the Central Government exempted all excisable goods on 
which duty of excise was leviable and in the manufacture of which any 
goods falling under Item No. 68 of the First Schedule of the Act had been 
used as raw material or component parts, from so much of the duty of the 
excise leviable thereon as was equivalent to the duty of excise already paid 
on the inputs. When Item IB under which the product falls says, prepared H 
13 
14 
SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R. 
A or preserved foods put up in unit containers and ordinarily Intended for 
sale, then for becomin& an excisable article, Horllcks must be put in 
containers, ready for sale. Therefore, the screw cap shall be deemed to be 
component part of Horlicks and notification No. 201/79 C.E. aforesaid 
shall be applicable. [16-D-F, 17·E] 
B 
c 
D 
Collector of C.E. v. Jay Engineering Works Ltd., (1989) 39 E.L.T. 169 
SC, relied on. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2891 of 
1985. 
From the Judgment and Order dated 28.3.85 of the Central Excise 
and Salt Act, Appellate Tribunal, New Delhi in 0. No. C. 279/85. 
B.B. Sawhney for Sawhney & Sawhney for the Appellant. 
N.K. Bajpai, V.K. Verma and Ms. Sushma Suri for the Respondent. 
The Judgment of the Court was delivered by 
N.P. SINGH, J. This appeal has been filed against an order dated 
28.3.1985 passed by the Customs, Excise & Gold (Control) Appellate 
• 
E Tribunal (hereinafter referred to as 'the Tribunal'). By majority decision 
(2:1), the Tribunal has held that the metal screw cap put on the bottle of 
• ·
the Horlicks is not part of the manufacturing process, because the Horlicks 
itself is a finished product and ready for consumption when it reaches the 
bottling plant. As such the metal cap cannot be held to be a component 
part to the finished product of Horlicks, so that it can be held to be 
F "excisable goods" covered by Notification No. 201n9-CE. On that finding, 
the order passed by the Collector (Appeals) was set aside. The Collector 
(Appeals) had held that screw cap used for the container of the Horlicks 
was very much an input and a component part, because without the screw 
cap, the prepared and preserved food like Horlicks cannot be packed into 
G unit containers for purpose of sale. A direction had also been given by the 
Collector (Appeals) to allow the credit on account of duty paid on the 
screw caps in terms of Notification No. 201/79-CE to the appellant. 
It appears that under Rule 8 of the Central Excise Rules, 1944 by 
Notification No. 178n7-CE dated 18.6.1977 general exemption of duty was 
H granted in respect of excisable goods on which duty of excise is leviable 
' 
1 
• 
H.M.M. LTD.v. COLLECTOR OFC.E.[N.P.SINGH,J.) 
15 
and in the manufacture of which any goods falling under Tariff Item No. A 
68 of the First Schedule to the Central Excise and Salt Act, 1944 have been 
used from so much of duty of excise leviable thereon as equivalent to the 
duty of excise already paid on the inputs. Notification
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