Customs, Excise and Gold Tribunal - Bangalore
Ramoji Rao vs Commissioner Of C. Ex. on 29 November, 2002
Equivalent citations: 2003(161)ELT494(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. Ramoji Film City (hereinafter referred to as RFC), is a project of one Shri Ramoji Rao, as Kartha of a Hindu Undivided Family of name and styled "Sri Ramoji Rao-HUF" (hereinafter referred to as HUF/RR-HUF), who is the appellant. This HUF owns several businesses identified with different names. The Show Cause Notice lists them out as M/s. Ushakiron Movies, Anajpur, Margadarshi Financiers, Margadarshi Computers, Priya Diary etc. Apart from the HUF-Units, Sri Ramoji Rao also heads various companies, which are part of his business group. These include M/s. Dolphin Hotels Ltd., M/s. Margadarshi Chit Funds Ltd., M/s. Ushodaya Enterprises Ltd. (Entertainment Division, Foods Division, Publications Division etc.) and M/s. Ushakiron Movies Ltd. etc. [Priya Foods Division of M/s. Ushodaya Enterprises Ltd., is a unit registered under Central Excise for manufacture of 'Priya' brand pickles etc., and clearing the same on payment of duty].
2. RFC was set up as a one-stop centre for film-making, spread over a vast area of about 1,000 acres in Village Anajpur, Rangareddy District, Andhra Pradesh. The Film City consists of numerous locations and landscapes which were developed to facilitate and cater to the requirements of out-door and in-door film shooting and production thereof. Necessary equipments, laboratory, Preview theatre and star hotels to provide accommodation to the film-personnel are all made available/located within the RFC. RFC is claimed as a place where a film-maker could walk in with a crew and walk out with a completed film. It is admittedly not a distinct legal entity, as in the case of a firm, company etc. Various group companies and units held by the HUF/RR-HUF have portions within the total area in the RFC. The HUF units situated within the RFC and relevant for the purpose of this case are hereinafter referred to as 'divisions'. Each of these divisions is engaged in the specialized areas providing necessary support services for filmmaking. The Anti-evasion officers developed an intelligence and pursuant to that conducted an enquiry and issued Show Cause Notice dated. 16-8-99 which proposed : -
(i) Recovery of duty on FRP sections and statues, models etc. made in the 'Maya' Division
(ii) Furniture and other wooden work manufactured in Harmony Division, Maya and Harmony are workshops within the Film City.
The production of these two divisions was used in other Divisions to construct studio sets, create special effects, as props therein as well as indoor fittings to equip the rooms of the hotel, cafeteria, to make the furniture parts which were thereafter fixed in-situ in the hotel rooms, lobby and elsewhere. This notice was issued to Shri Ch. Ramoji Rao, Kartha of RR-HUF, Shri Ramamohana Rao, Attorney of the Kartha, and Shri K. Ravindra Rao, Accounts Manager and duty was demanded from them, jointly and severally as duty payable on excisable and dutiable goods manufactured and cleared by them during the period 1994-95 till June 1999 as detailed in the annexures to the notice. Notice also proposed imposition of equivalent penalty under Section 11AC and penalties under Rule 9(2), 52A, 173Q and 226 of the Central Excise Rules and interest at 20% per annum was demanded under Section 11AB and penalties were also proposed under Rule 209A of the Central Excise Rules on the three persons mentioned herein above. Land, Building, Plant and Machinery used in connection with the manufacture, storage, captive consumption and removal of excisable goods without payment of duty under Rule 173Q(2) of Central Excise Rules was also proposed.
3. The Commissioner after hearing the noticees ordered: -
(i) That the goods namely furniture, statues and FRP manufactured at Harmony and Maya and by M/s. RR-HUF are classifiable under Tariff Sub-Heading 9403.00, 9618.00 and 3925.99 of the Central Excise Tariff Act, 1985.
(ii) An amount of Rs. 3,76,43,230 as the total duty was payable by the RR-HUF units on the furnitures, statues and FRP manufactured and cleared.
(iii) A combined penalty of Rs. 2,7647,204/- was imposed on RR-HUF units viz., M/s Harmony and Maya, being the penalty equivalent to the duty amount payable prospectively with effect from 28-9-1996 under Section 11AC read with Rules 9(2), 52A and 226 of the Central Excise Rules.
(iv) He ordered charging of interest under the provisions of Section 11AB on the total duty payable i.e. Rs. 3,76,43,230/- from the date and same was due till the date of its payment.
(v) He ordered confiscation under Rule 173Q(2) of the land, building, plant and machinery etc. and gave an option to redeem the above said items on a fine of Rs. 20 lakhs only by the RR-HUF.
(vi) He dropped proposals made in the Show Cause Notice for imposition of penalty under Rule 209A on Shri RR-HUF, Shri A. Ramamohana Rao, Attorney and K. Ravindra Rao, Accounts Manager. Hence, this appeal.
4. The ld. Commissioner vide his impugned order classified under the Headings as follows:-
(i) Furniture and similar goods classifiable under Chapter 9403; and
(ii) FRP Section classifiable under Chapter 3925; and (in) FRP/POP Statues classifiable under Chapter 9618 in their wholly owned workshops namely Harmony and Maya for use in within the film city in the HUF units and the companies.
5. After hearing both sides and considering the issues, it is found : -
(a) The submissions of the appellants are:
"ITEMS UNDER DISPUTE:
(i) Whether film sets and settings such as temples, churches, gurudwara, mosque, etc., are classifiable as FRP sections under chapter 39.25 of the Central Excise Tariff Act, 1985?
(ii) Whether the statues placed in various locations within the film city made out of FRP & PoP materials would fall under Chapter 96.18?
(iii) Whether the furniture processed for use in the film sets, hotels and other places would fall under Chapter 94.03 of the Central Excise Tariff Act, 1985?"
Appellants are addressing the first two items together as the principle involved is the same.
Film sets, settings and statues:
Three questions crop for consideration, which are: -
(i) Whether the items are exigible to central excise duty as excisable items?
(ii) Whether they would fall under Chapter 39.25 in the case of film set and settings, which Revenue has classified as FRP sections and statue under Chapter 96.18 of the Central Excise Tariff Act, 1985?
(iii) Whether they would be eligible for any exemption under Notification No. 76/86 dated 10-2-86 as Handicrafts?
Back ground Maya which is a center for making diverse and versatile conceptions of craftsmanship. More than 50 designers employing techniques of traditional method of designing as well as computer graphs give shape to the thoughts of the art director.
They prepare intricate drawings and images from the conceptions provided by the art director. The draughts men pass their ideas to various craftsmen like skilled carpenters, casters, design moulders and sculptures.
The centre is a place where various sets and settings are made to create an object carrying aesthetic and visual authenticity to the objects of creation. Importantly, the work does not involve use of machines or electricity and are from consumption to completion the work is a creation of artist and craft man. Only the operation of blowing unwanted particles of dust is done by employing blowers (like air blowers employed in hair cutting saloons).
In other words, the carpentry works, moulding work and the creations of object are done by hand. What may be observed is that the various artists and craftsmen under the leadership of the Art Director work to recreate authentic architectural details harmonising to the place, time and condition of the output and reproduce structures and artistic pieces.
The source of the creation is at times pure fantasy, besides from research done from authentic books of art and historical monuments. Plaster of Paris or as the case may be Fibre Glass is used because they are user friendly and enable quick replication of the original. It is like the preference of soap stone to granite in the architectural works of the medieval periods. They are cost effective considering the huge money spent on craftsmen and artists. The materials provide and enable easy holding, moulding and completion with flexibility amenable to quality finishing to required texture and colour, and are light in weight and importantly weather proof in quality.
These artists and artisans hail from Bombay, Calcutta, Bihar and Orissa where traditional skills in these avocations are well developed.
Manner of preparation
(a) The creations are ultimately work of art and these are used in the film settings and locations. These are first prepared out of intricate drawings and images from conceptions. The drawings are later translated to plywood and this is followed by preparation of the said item using clay. This day base is utilised for preparation of PoP moulds and fibre glass moulds. PoP mould is employed for taking one impression and fibre glass moulds used for taking two to five impressions. Moulds made out of PoP and fibre glass are again translation of creative conceptions, designing and exquisite craft work of artists.
(b) The images that are produced again undergo workmanship and finishing before being ready. The initial conceptions in the form of drawings and images prepared by draughts men pass through a set of skilled-craftsman like carpenters, casters, design mouldings and sculpture. These items are created with an object of carrying aesthetic and visual authenticity to the object of creation. From conception to completion the work is carried out through hands. The source of creation is at times, pure fantasy, besides research done from authentic books of art and historical monuments.
(c) Even during the investigation Shri Nitish Roy the then Art Director had explained the above sequence of activities which involves conceptualization of the design in the minds of the artists which are translated into simple drawings based on any authentic books of art, album of art or from pure imagination,
(d) These designs are given to the artists who then get and transferred to plywood surface on full size scale, which is called 'forma'. The 'forma' helps to get the day moulding done i.e., to get the design shaped with clay on any plain surface. Based on the clay model one can go for making the master copy in PoP moulds.
(e) On the mould are then applied two coats of gel coats, mixed as it is with resin and black white pigment, this is liquid fibre made of gel coat and resin.
(f) Once this get dried up fibre glass mat with chopped mat are put into it and the function of the chopped mat is to fill up all possible tiny recesses that might exist in the surface. Depending upon the size of the piece to be cast 5 to 7 layers of mat are applied with resin. Once the FRP mould is formed, the same is removed from the cast and the same is given final touches. Defects if any are removed.
(g) When it comes to the fine finishing operations these are done at two stages. Firstly at the time of finishing in clay design and the clay models and finally in the fibre glass moulds.
(h) Clay designs are made in three ways, small size designs are made on ply wood. Medium, Designs are made on wooden armature. Large designs are made on wooden platform. Fingers are the main tools. All the delicate designs based on authentic books of art, album of art or from pure imagination are brought into relief through the deft use of fingers. So in all sense the design works starts in the same platform as any handicraft work does. The clay work is then smoothened and is brought into perfect shape with the help of ordinary household things like knife and stick. Any possible deformity caused by such ordinary instruments is repaired again using fingers especially the thumb. At last the brush is used to give the final touch up of finishing to the clay work structure.
(i) When it comes to finishing the fibre glass moulds the fibre class moulds have a roughness or coarseness on their surface. Sand paper is used to get the surface smoothened duly. Also different type of files and knives are used in the chiseling process only to get the fine finish of the designed moulds. Then comes to the turn of painting wherein double coat of primer is used on the specific mould along with the lappam putting. Secondly the particular colour is also used in double coats on this primer as per the demand of the directors. We are enclosing a paper book comprising of write up along with features of art piece made, source of conceptions, place or location, cost of making the set along with photograph of the art piece as at present available in the film city. These have all been made from time to time in Maya.
Facts for consideration:
1. The items under question are creations of art out of imagination in the form of film set or settings and do not have any commercial identity and are not used as articles of merchandise in regular trade and commerce.
2. The base material made up of FRP or PoP is of no consequence, and they pale into insignificance the moment creations are made. What remains is the visual beauty and aesthetic appeal which the items exhibit on their own.
3. In other words, creations such as a palace, a temple or a mosque or a statues is not recognised by the viewer by its base material as an article of plastic or as an article of PoP.
4. The process of creation is akin to the process of painting. An artist can paint a figure or create a piece of art in the form of drawing having paper as a base material or canvas as a base material. The base material is used to complete the activity of creating the work of art. The moment the art work is created, the work of art alone remains and the artist or the viewers look only for the work of art and not the paper or canvas on which it is made.
5. What is valued in a film set and settings is the conception and the creation irrespective of the materials employed. It is FRP or PoP today. It could be something else tomorrow. It does not really matter as long as the conceived items is a visual beauty and there is no controversy on this aspect. Prior to FRP or PoP, articles employed were wood and canvas. The present day choreographers are trying to employ rubberized materials as a substitute to plastic or FRP, The creation therefore cannot be called as wooden articles in the past, plastic articles in the present and articles of rubber in future.
6. These works of art do not have any functional utility. For example, a piano may look like a piano. But that piano cannot be as a playing instrument. Sometimes, these items are designed to given a opposite effect. For example, a bed if a commodian sits will break. These are used in the make believe world of film shooting. They only appear as a particular item but are not understood as such in the market. Even if they are brought to the market, these are not traded but or only auctioned as collector's items and not as furniture. What it fetches is only a fancy price in auction for its star value status, but not for its functional utility.
Excisability/Dutiability of these items:
Section 3 of the Central Excise Tariff Act, 1944 imposes duty on goods produced or manufactured in India. Excise duty is on an activity of manufacture resulting in manufacture of goods meant for trade and consumption. A work of art can never be conceived as manufacturing process in the Central Excise Laws. Drawings or artistic creations are not conceived as manufacturing process, and there is no Chapters or Tariff Entries to assess them as goods.
At this juncture attention is drawn to Customs Tariff Act, 1975 Chapter 97. Chapter 97 falls under Section XXI of Customs Tariff Act, 1975 and the said chapter comprises of goods which are "works of art, collectors pieces and antiques". In other words, there is a separate chapter for creative works such as painting drawings, engraving, sculpture and antiques. Customs duty is not on manufacture but is imposed on the importation of goods into the country. The taxable event is importation unlike Central Excise which is on manufacture. Therefore importation of these items referred above are identified under a separate chapter for the purpose of imposition of customs duty. But a similar chapter or section is not available under the Central Excise Tariff Act, 1985. The reason is obvious. Work of art can never be considered as a manufacturing activity. Therefore there is no corresponding chapter or section under the Central Excise Tariff Act, 1985 to impose excise duty on works of art.
Attention is also drawn to Chapter 99 of the Customs Tariff Act, 1975. Entry 99.06 speaks of works of art intended for exhibition in a public museum or national institution. In other words, importation of works of art for exhibition in a public museum or national museum would fall under Entry 99.06 of the Customs Tariff Act, 1975. There is no such corresponding entry in the Central Excise Act for work of art. The show cause notice nowhere disputes the position that film sets and settings are works of art. They only try to say since these are prepared out of plastic or PoP and they become articles of plastic or PoP. In the absence of any entry in the Act and when the activity do not fall under the conventional definition of manufacture, and in the absence of any deemed definition by the Parliament, the artistic creations in Maya cannot be called as a manufacturing activity.
In short a creative work of art arising out of one's own imagination cannot be construed as an industrial activity of manufacture. It is for this reason that drawings, sculpture, film sets and similar such items do not figure in the Central Excise Tariff Act, 1985 as these are not products for trade and consumption. Further, the items under question are not marketable. Marketability is sine qua non for imposition of Central Excise Duties. These goods are not bought and sold as articles of plastics or as builders ware. Market or trade does not recognize this product as articles of plastics or builders ware.
A film set or settings is created essentially for a make belief situation. They do not have any utility value as the items referred to in Chapter 11 to Chapter 39 or for goods falling under Entry 39.25 of the Central Excise Tariff Act, 1985. In short, these are not goods known to the market for the purpose or utility ascribed under entry 39.25 and these are not traded or marketed as goods or articles of plastics or as builder ware. The goods are therefore not liable to duty under the Central Excise Act, 1944.
Classification under Entry 39.25 and 96.18:
(a) Entry 39.25 talks about builders ware of plastic, not elsewhere specified or included and the sub entries include items such as reservoirs, tanks, vats and similar containers, doors, windows and their frames and thresholds for doors, shutters, blinds, etc. Chapter Note 11 to Chapter 39 again furnishes list of items which further include structural elements in the form of floors, walls or partitions, gutters and fittings, large scale shelving, ornamental architectural features for example flutings, cupolas, dovecotes etc. The articles conceived under Entry 39.25 or under Chapter Note 11 to Chapter 39 have commercial identity and commercial utility. These are goods produced meant for trade and consumption.
(b) If these are produced out of Steel they get classified under Chapter 73 as articles of steel. If these are produced out of Aluninium they get classified under articles of aluminium under Chapter 76 and if these are produced out of plastic they fall under Chapter 39. In other words, the products get classified based on the base material used and the resultant out put which have commercial identity and utility.
(c) On the other hand, the items under question in the present proceedings which are creations of art out of imagination in the form of film set or settings do not have any commercial identity and are not used as articles of merchandise in regular trade and commerce.
(d) Items referred to in the Tariff Entry such as doors, frames, etc., are traded and purchased to be put into a factual commercial use which is conspicuous by its absence for the items under dispute. The base material made up of FRP or PoP is of no consequence, as they pale into insignificance the moment the creations are made.
(e) The items referred to in the Tariff retain the character of the base material out of which it is prepared. Besides retaining their commercial identity and utility as beams, etc. In other words, market recognize a plastic door as an article of plastic with a recognized utility as a door or a shutter. On the other hand, creation of temple or mosque or a statues is not recognised by its base material as an article of plastic or as an article of PoP.
(f) Revenue has not let in any evidence in any form to show that the world does not view these articles for aesthetic beauty but view it as mere articles of trade based on the base materials as articles of plastic or articles of PoP, etc. We reiterate no evidence has been cited or referred. No statement recorded. No enquiries made and no proof furnished.
(g) On the other hand appellants have submitted evidence by showing that the entire location has been declared as a tourist centre vide G.O. Ms No. 31 dated 13-4-94 by the Government of Andhra Pradesh. Para 2 of the Government Order reiterate keeping the national action plan for tourism formulated by the Government of India, the State Government after careful consideration hereby notifies the places specified in the Annexure-I to this order as special tourist centres. When the place has been declared as a tourist centre and when more than 2000 tourist visit the place every day the inference is natural that the visitors and tourist come to see the aesthetic beauty of the creations and not articles of plastics or articles of PoP.
(h) The preparations may involve an activity of polymerization. But here again the preparations ultimately are not plastic articles. An artist uses various paints and varnishes to create a work of art. Paint and varnishes are chemicals. These are employed in a canvas. It therefore cannot be said that the artist is involving himself in chemical treatment or a chemical process and therefore the finished piece of art are products of chemical industry. The fibre moulds are employed in layers to obtain a firm mould which is resultant of pure imagination translated into a work of art through deft use of fingers.
(i) Chapter Note 11 to Chapter 39 again does not have any relevance as creations are not commercial installations in the form of doors, windows, statues, etc. The creations are not made for dwelling purposes and are not fit for occupation. There is only a frontage replicating a house or a palace, etc. But in reality there is no permanent place of dwelling. These are refurbished periodically and in most of the cases the sets are changed once the shooting gets completed.
(j) The allegation that appellants are producing FRP articles such as beams, columns, pillars, etc., is factually wrong. These are prepared to erect temporary works of art and these are not beams or pillars employed in erecting any permanent structures made out of plastics. Fortunately, the show cause notice concedes to the position that these are employed for interior decoration. Creating a frontage or replicating a monument for shooting purposes cannot be called as erecting a structure. It is reiterated that they have no value or identity nor are these items marketed or traded as items referred to in Chapter Note 11 to chapter 39 or as goods falling under chapter heading 39.25 of the Central Excise Tariff Act.
(k) An activity of polymerization using FRP material will not make all the items as articles of fibre reinforced plastic. An article of FRP is known as an article of FRP at the time of production, clearance and use. In this connection, reference is drawn to the decision of the Tribunal in the case of Commissioner of Central Excise, Bombay v. Fibrotec India, [1997 (90) E.L.T. 489 (T)] wherein the Tribunal was pleased to hold that FRP items which are commercially known in the market as FRP roofings will be covered by Chapter Note 11 to Chapter 39.35. The Tribunal also confirmed the evidence produced in the form of literature, invoices and documents to prove that the end use of the goods are only as builders ware.
Moulds:
It is the revenue's case moulds would fall under Chapter 84.80 and therefore they are liable to duty. It is also the revenue's case that moulds have been captively employed in the processing of film set and settings and since duty is imposed on the final products moulds are exempt from duty vide captive consumption notification No. 67/95 dated 16-3-95. It is our respectful submission that moulds are not liable to central excise duty and therefore any reference or extension of captive consumption benefit is either not relevant or referred out of context.
What applies to the object created by employing PoP moulds or fibre glass moulds should also apply to the moulds themselves which are again only intermediate consumption of the artists and craftsmen. These are again prepared through hands and become a mould after getting prepared out of intricate drawings and images. Further these moulds do not have shelf life. In the case of PoP moulds these are employed to generate one creative output and in the case of FRP moulds these are not used beyond three or four creative output. These again are not moulds which can fall under Chapter 8480. Entry 8480 talks about moulding boxes for metal foundry, mould bases, moulding patterns, moulds for metal other than ingot moulds, metal carbides, glass, mineral materials, rubber or plastics. The moulds employed which are intermediate consumption cannot be classified under 8480. When an item is not excisable or classifiable, the question of extending any exemption does not arise. In this connection reference is drawn to the decision of the Tribunal in the case of Hindustan Sanitaryware Indus. v. Collector of Central Excise, New Delhi [1998 (104) E.L.T. 562 (T)] wherein the Tribunal was pleased to hold plaster of paris mould used in the manufacture of ceramic sanitary ware are not marketable goods and therefore not liable to duty. Notwithstanding a mention being made in the HSN Explanatory Notes. The said ruling will squarely apply both to FRP moulds and PoP moulds. They are not durable and permanent pieces and are not bought and sold as moulds contemplated under Entry 84.80. These are in house preparations utilised temporarily for creating an artistic piece. They do not have any identity, name or character to be recognised as moulding boxes, mould bases, moulding patterns and moulds for metal. It is also an equally well settled proposition that mere entry is not sufficient to tax the goods unless otherwise the same is bought and sold as goods in the market. In this connection reliance is placed on the decision of the Constitution Bench of the Supreme Court in the case of CCE v. Man structura [2001 (130) E.L.T. 401 (S.C)].
Statues:
It is respectfully prayed that the submissions made for film set and settings on the aspect of non-dutiability or non-excisability would mutatis mutandis apply to the statue creations located in various parts of the film city. Revenue seeks to equate the same with that of "Mannequins" to fall under Chapter 9618. Entry 9618 talks about tailors dummies and other lay figures, automata and other animated displays used for shop window dressing. The entry is clear and specific only items used for shop window would fall under 9618. These are all machine made items prepared out of metal moulds and are being traded as articles of merchandise. "Mannequins" which can be produced through machines cannot be compared to a statue created initially through an imagination in the minds and translated by skilled craftsmen. A statue is a work of art whereas a "Mannequins" is a piece for commercial display. In any view, these items are never employed at any stage for shop window pressing. These are used in various locations for film shooting as part of film city and therefore they do not merit classification under Chapter 9618.
Notification No. 76/86 dated 10-2-86 as "Handicrafts":
Assuming but not admitting, should the Revenue still hold the view that the activity might amount to manufacture, the goods in question are not liable to duty since these are exempted as handicraft under Notification No. 76/86 dated 10-2-1986. The Supreme Court had an occasion to examine the said notification in the case of Collector of Central Excise, New Delhi v. Louis Shoppe, [1996 (83) E.L.T. 13 (S.C.) Wherein the Apex Court had laid down the following tests for an item to classify as handicraft.
(1) It must be predominantly made by hand. It does not matter if some machinery is also used in the process.
(2) It must be graced with visual appeal in the nature of ornamentation or inlay work or some similar work lending it an element of artistic improvement. Such ornamentation must be of a substantial nature and not a pretence.
The Central Board of Excise & Customs vide Circular No. 32/99-Cus. dated 4-6-99 has also clarified that the test laid down by the Supreme Court, in the above referred case should be kept in view while deciding an item as a handicraft.
The works at Maya had been completely made by hand. The articles are made for visual appeal and necessarily involve craftmenship of the highest order. Many of the items involved in lay work i.e., super adding one material over the other to a prepared pattern namely making ornamentations like post, supports, palace arcades. There is an element of artistic improvement. For these reasons the place attracts Tourist and it is an approved Tourist Center recognized as such by the Government of Andhra Pradesh by G.O. Ms. No. 31 dated 13-4-1994. It would be irreconcilable and inconsistent to call a Tourist Centre as a factory of manufacture.
The evidence found in the paper book comprising of various settings and sets would stand testimony to the fact that each creation is graced with visual appeal and lends an element of artistic improvement and the replications of a temple or mosque is almost the same and is of a substantial nature and not a pretence.
Findings of the Commissioner:
1. Internal Page 22 and 23 Paras 12 to 12.2 - All these items are used in film shootings. They are interchangeable to form different shapes and sizes and are easily removable/locatable. The facts clearly show that they are themselves finished goods in the hands of Maya and are capable of being used in varied applications. In view of the above characteristic they cannot be regarded as semi-finished/unfinished.
2. The set structures like temple emerge in the hands of a receiver units. The receiver units can use the said FRP sections to create artistic creations of handicrafts. But there is no purpose or meaning in looking at what is happening at the receivers end, since the demand proposed in the show cause is on the FRP sections made by Maya and not on the structures made out of them by the receiver units.
3. The said FRP sections were used to built various interchangeable structures like temples, etc., classification of the said FRP articles under Chapter 39.25 as builders ware of plastic would be the correct one.
4. They are manufactured for repeated commercial use and not as an expression of one's artistic talents and therefore not eligible for exemption as handicraft. Any engraving or inlay work on them cannot be considered to be lending them any artistic improvement with visual appeal.
Comments:
1. Having held that the entire creation gets completed in the hands of the appellants (Maya), there is a contradiction in the later paragraph by observing that temples or mosque emerge in the hands of the receiver units.
2. The suggestion at Para 12.1 that appellants have submitted that what is cleared are only FRP articles in unfinished form and only temples, churches, etc, are finished goods which get fabricated using FRP sections is incorrect. No such submission made by the appellant evidence on record would confirm the position that Maya which is a centre for creation of art produces the entire creation in stages commencing from the conception of idea till implementation.
3. It is evident that a temple or a church etc., moves as a set out of Maya.
4. There is no FRP section for any independent assessment. The nomenclature suggested is without basis or evidence and there is no support for the same in any manner.
5. The aspect how goods will not fall under Chapter 39.25 has been dealt in the previous paras and the same may kindly be read as part and parcel of these comments.
6. The aspect as to how exemption Notification No. 76/86 dated 10-2-86 as handicrafts would be applicable is also been dealt with in the previous paras and the same may kindly be read as part and parcel of these comments.
Findings by the Commissioner on FRP/PoP Statues :
1. What are manufactured are the one's normally described under Tariff Sub-heading 96.18 and just because they were put up for different use in RFC does not make them difference.
2. The Appellants had not let in any evidence like the process involved in making the said FRP/PoP statues were different from that of the items described in tariff sub-heading 96.18 to prove that the said statues were not comparable with the goods under 96.18.
Comments:
1. The entry is clear and specific only to such items used for shop window.
2. The entry would receive only such items which are traded as ''mannequins", as articles of merchandise.
3. Entry 96.18 is an end use base entry and therefore it is settled law that when entry conceives an end use, goods to be classified under the said entry should satisfy that end use. In this connection reference is drawn to the decision of the Tribunal in the case of Interarch Building Productions (P) Limited v. Collector of Customs [1993 (65) E.L.T. 80 (T)] wherein the Tribunal vide para 6 had held that the plea that classification is not dependent upon end use of an article as held by the Supreme Court in the case of Dunlop India, The proposition would hold good only as long as the end use is not specifically mentioned in the Tariff entry itself and if the tariff entry contemplates an end use then use of an article for such an end use is relevant for classifying the said item under the said entry. Supreme Court in the case of Collector of Customs v. Kumudan Publications (P) Limited [1997 (96) E.L.T. 226 (S.C.)] has also held that it may not be entirely correct to say that in a given case end use or function of the goods is relevant on the question of classification.
4. The trade and market do not treat statues as similar to tailors, dummies and other lay figures.
5. Items falling under 96.18 are not creations of art based on any authentic historic depiction. None of the statues are used for the purpose stated in sub-heading 96.18. Usage in shop window dressing is a sine qua non for entry into the heading. The items under question are not for shop window dressing. Going by the Explanatory Notes to HSN the heading or entry if at all would be 97.03. Since carving of statues is not a manufacturing process chapter 97 is not incorporated in the Central Excise Tariff Act, 1985. Parliament has not mandated that duty should be levied on such an activity.
6. In any view the learned authority has not chosen to deny the eligibility of exemption notification 76/86 dated 10-2-86 Furniture and similar goods
1. It is the revenue's case that the furniture produced for use in the film sets, hotels and other locations are excisable items and fall under Chapter 94.03 of the Central Excise Tariff Act, 1985. Before going into the aspect of excisability and classification of furniture the principle question which needs to be addressed is whether the articles produced are manufactured by the appellants or by various independent contractors. Appellants wish to make the following submissions in this regard before deciding the aspect of excisability and availability of exemption Notification No. 76/86 dated 10-2-86.
2. RFC is a film city location which comprises of various other divisions of the group, which includes star hotels such as Dolphin Hotels. The film divisions and hotels and other divisions requires furniture and fittings for their respective uses. With a view to address the requirement of each of the divisions the services of various furniture contractors with their set of carpenters and skilled men were obtained. Harmony one of the appellant was merely as a facilitating centre for the contractors and the contracting parties. The necessary raw materials for production were issued directly by the various divisions to the contractors. Preparation of furniture is a skilled job and the activity has to be carried out entirely through skilled carpenters through the use of hands. Machines are used only for plaining and cutting of raw wood and machines cannot be used for the manufacture of furniture of this nature. It is the consistent case of the appellants that proceedings if any ought to have been issued only against the independent contractors and not against Harmony for the following reasons :
(a) There are three parties involved namely the user division, the contractor and the facilitating centre namely the appellants. Proceedings if any therefore ought to have been initiated either against the user division or against the contractors and not the appellants.
(b) The show cause notice itself admits that these items are made by contractors/carpenters on job work basis and therefore demand against the appellants is misplaced.
(c) Harmony on its own does not fabricate or produce goods. Independent contractors engaging their own labour force, tools and tackles produce the goods. Goods are not meant for harmony and salaries are not paid by harmony. Raw materials such as wood, paints, lining material, etc., are not supplied by harmony and these are provided directly to the contractors by the user divisions.
The Witnesses during cross examination submitted the following:
(1) They are not dedicated staffs or workers or hired labourers of the appellants. They carry out works in various places including in RFC (2) Each of the contractor has about 15 to 20 carpenters and the activity supervised by the contractor and the carpenters report only to the contractors and not to Shri Pratap Singh of Harmony.
(3) They are riot employees of Harmony and are not bound by any agreement to work in the Harmony of RFC.
(4) Quotations were offered based upon the nature of work.
(5) Manufacture of furniture involves skill by the usage of hands and only cutting and plaining is done by machinery.
(6) Due logistical convenience some of the items are also made at site of the user division.
(7) Contractors are responsible for the defective furniture.
(8) Witness also confirms that whatever explained during cross-examination are also asked by the investigating officers (how-
ever nothing is reflected in the show cause notice or appeared to have been noted down while recording the statements).
(9) Works are carried out based on the terms of the contractors.
(10) Based on commercial consideration and competitive rates contractors on some occasions may get lesser rate for the work done which is being accepted. However, once rates are finalised, they would not receive anything less than what was finalised and due to them.
(11) They also confirmed that furniture cannot be made only with cutting and plaining and manual skills are involved.
(12) Contractors are not prevented from doing any other independent job outside harmony.
Pratap Singh consultant of Harmony deposed the following:
(i) He is a consultant and not an employee of Harmony. His role is that of a facilitator. The machines referred in the show cause notice are used for plaining and cutting and cannot be used in the manufacture of furniture which is done only by hand all over the world.
(ii) Contractors are not his employees. Items are manufactured to a specific requirement at site and the carpenters report to their contractors. The increase or decrease in rates depends on commercial consideration and the payments are made directly by the respective divisions to the contractors. There is also hold on amount against the contractors by the divisions.
From the above analysis it is clear that contractors who are independent operators and not hired labourers are the manufacturers of goods and duty if any is payable only by them and proceedings if any ought to have been initiated only against them.
It is the independent contractors who manufacture and clear the goods to the user division. Therefore in no way RFC or its constituted user decision acquire the status of a manufacturer in fabrication of these furniture. The independent contractors are supplied with wood/raw material in cut and planed condition and it is the independent job workers who convert the raw materials into finished goods viz furniture and other wood works.
It is a settled law that one who produces the goods is the manufacturer. Even though the adjudicating authority has referred to the cross examination proceedings (Para 5.2 to 6.5 - Pages 8 & 9 of the order) the aspects referred above have not been denied or controverted in the order. Once the contractors are held to be independent manufacturers it would be erroneous to initiate the proceedings or confirm the duty demand against Harmony. It is for this reason appellants submit that a conclusion that appellants are manufacturers and not the contractors is unsustainable in law and failure to issue show cause notices against the contractors would result in a proceeding lacking jurisdiction. To this effect appellants relied on the decisions of the Tribunal in the case of Ogesh Industries v. Commissioner of Central Excise [1997 (94) E.L.T. 88 (T)] and Dawn Fireworks Factory v. Commissioner of Central Excise [1999 (31) RLT 104 However, the learned authority vide para 9.2 and 9.4 (pages 17 and 18) has held that facts, evidence and details of the case unearthed during investigation conclusively and unambiguously reveal Harmony to be the manufacturer under Section 2(f) of the Act. Since carpenters have been examined under Section 14 no ex parte conclusion have been drawn.
Appellants respectfully submit that but for an assertion that there is conclusive evidence, order does not furnish any valid evidence in support of the plea and has not denied any of the factual evidence and submissions made by the witnesses during cross examination. Issuance of summons is totally different from issuing a show cause notice against an alleged manufacturer. The Tribunal decisions have held consistently that revenue is not at liberty to make ex parte decisions.
Vide Para 9.4 the learned authority has observed that appellants have failed to furnish the list of contractors. The allegation is incorrect. The minutest of details in the form of nature of work, period, contractors name, bill number, year of work has been furnished against every contractor for every piece of activity carried out in the film city. Having held that the deposition of 4 contractors should be taken as representative in character the learned authority ought to have taken into account the cross examination proceedings of all these contractors. Assuming but not admitting proceedings are maintainable Harmony cannot be held as a manufacturer for which we have made enough submissions along with evidence. We now seek to support this view also with the following case laws:
(a) It is clear on record that the carpenters report only to the contractors that the contractors who supervise the works. Mr. Pratap Singh is a consultant of Harmony and is only responsible for the over all activity and not a direct supervision or coordination with each of the carpenters for each of the work. At the most Mr. Pratap Singh's role can be stated as one of Technical Advisor. The Tribunal in the case of Coimbatore Aero Based Control Systems (P) Limited v. Commissioner of Central Excise, Coimbatore [2000 (116) E.L.T. 193 (T)] has held that a technical advisor cannot be held to be a manufacturer when it is clearly established the manufacturing activity carried out by the third parties themselves.
(b) In the case of Binny Limited (Engineering Works) v. Collector of Central Excise, Meerut [1998 (99) E.L.T. 681 (T)] the Tribunal was pleased to hold that a hired labour is one who hires himself out of work for and under the control of another for wages. But because he makes goods for another customer for a consideration he cannot be said to have hired himself out to another person for manufacture of goods or that the customer for which he manufacture goods. To constitute hired labour, relationship of master and servant between those hired and hiring is a must, which implies active control and supervision of those hired Evidence on record shows that the contractors are independent and work on their own will with no obligation to surrender their independence to Harmony.
(c) The Tribunal in the case of Fykas Engineering (P) Limited v. Commissioner of Central Excise, Bombay [2000 (122) E.L.T. 168 (T)] had held that one who carries the actual manufacture would be the manufacturer based on the Apex Court decision in the case of Commissioner of Central Excise, Baroda v. M.M. Khambhatwala [1996 (84) E.L.T. 161 (S.C.)] and it was further pleased to hold that inspection of goods would not make one a manufacture or the operations as amounting to manufacture.
(d) The Tribunal in the case of Blue Star Limited v. Collector of Central Excise, Madurai [1999 (107) E.L.T. 609 (T)] was pleased to hold that the job workers are independent contractors performing work on the materials supplied and would be manufacturers in their own capacity even though goods are manufactured at the site and premises of the principal.
(e) The Tribunal in the case of B.S. Rajasekar v. Collector of Central Excise [1993 (63) E.L.T. 369 (T)] had held that supplier of raw material to other units would not make the supplier the manufacturer. In this connection we also place reliance on the decision of the Madras High Court in the case of Ashok Leyland Limited v. Commissioner of Central Excise [1993 (68) E.L.T. 65 (Mad.)] and the Supreme Court decision in the case of Collector of Central Excise v. M.M. Khambhatwala [1996 (84) E.L.T. 161 (S.C.)] and the decision of the Supreme Court in the case of Pawan Biscuits Co. (Pvt.) Limited v. Collector of Central Excise, Patna [2000 (120) E.L.T. 24 (S.C)].
When supplier of raw material cannot be held to be a manufacturer permitting usage of machines for the limited purpose of cutting and planing will not make Harmony the manufacturer especially when the cost have been borne by the respective divisions. In other words, raw material supplied and cost towards usage of machinery for cutting and planing which are simple operations and were borne by the respective divisions. Harmony is only a facilitating centre and proceedings therefore are not maintainable.
The transactions relating to the division 'Parade' cannot be assessed at the hands of 'Harmony', when the entire activity has been between Parade and the independent contractors Harmony had no role to play. Department vide letter dated 16-6-1999 sought for clarification on the assumptions that certain amounts were also figuring in the books of Harmony and there are no corresponding entries in Parade and therefore works had been carried out only by Harmony. In response to this letter Parade had clarified vide letter dated 19-6-1999 along with supporting evidence and details. The show cause notice has conveniently ignored this aspect and has burdened 'Harmony' with the alleged liability. In fact neither 'Harmony' nor 'Parade' are manufacturers. As stated earlier, it is the independent contractors who are the real manufacturers. The entire correspondence between the department and Parade in this regard is enclosed as an annexure to this reply and the same may therefore be read as part and parcel of this reply.
In the circumstances the clearances relating to Parade should also be excluded. Notwithstanding the above and without prejudice the appellants submit that should demand made against Harmony the whole demand has to be reworked taking into account the exemption towards handicrafts of FRP items, statues, furniture items set properties and the aggregate clearances also have to be worked out in terms of the SSI notification for each financial year. It is also submitted that if duty is imposable the benefit of cum-duty as held by the Supreme Court in the case of 141/3 should also be extended. We reiterate this plea is made without prejudice to the principle submission that no proceedings would lie against Harmony and no duty is imposable against any of the goods under dispute.
Findings by the Commissioner on availability of notification 76/86 dated 10-2-86 (Para 10 to 0.2 Page 19):
(a) Furniture is manufactured by using machinery and are put to commercial use in hotels.
(b) Even though they may have artistic/decorative finishing they were made for commercial use and not solely for the purpose of display as handicraft and for promoting traditional/cultural craftmenship/heritage of India.
(c) The public or the persons who see the items should feel elated on seeking.
(d) Any ornamentation/decoration made in any item, if it is not done substantially to lend the said element of artistic improvement cannot be regarded as handicraft even if it has lot of ornamentation/decoration in it.
(e) The said furniture might have been made with engraving and in law work but still such works cannot be said to lend them substantially the element of artistic improvement. They are only furniture intended for utilitarian purposes and hence liable to excise duty.
Comments:
(i) Supreme Court in Louis Shoppe case has laid down two important guidelines and it has not excluded items which are otherwise Handicraft as ineligible merely because they are put to commercial use or utilitarian purposes. No such exclusion is contemplated in the decision. In fact the items under dispute in the case of Louis Shoppe is only furniture and fittings.
(ii) Finding that items are not solely for the purpose of display or promoting our traditional heritage is again not a guideline prescribed in the Supreme Court in the above referred decision.
(iii) Having held at one breath that the items under question have lot of ornamentation/decoration it would be inconsistent to say in the very same sentence that any ornamentation or decoration if not done substantially cannot be regarded as artistic improvement.
(iv) Reference to Entry 9403 read with the Explanatory Notes to HSN including the exclusion clauses goes to show that items which do not have the character of furniture would not fall under the said entry.
Limitation The creation of film set and settings has been in vogue in this country since the inception of film industry which is almost one century old. Similar activities are carried out for shooting Maga Hit Movies, T.V. serials, tele films, soap operas, and these creations have not been held as excisable by any of the Divisions or Ranges.
The activity of motion picture making and as a corollary making of artistic sets are well known since 1940 in India. It may also be appropriate to indicate apart from these situations and creations being found and looked in different cities, film cities, amusement parks, these are also created for special occasions like Independence Day and Republic Day Parades, where authentic and highly artistic structures and creations are made as visual appearance showing to the people the history and development of the country. In the history of Central Excise duties have never been imposed on these institutions on these items if one would switch on the TV serials after serials and soap operas are being telecast. The producers are using only similar such sets. For example there is a duty demand on a baghawatham set which is very similar to sets employed in shooting Ramayana and Mahabharata tele-serial. There is no history of any central excise demand on these sets. We have also enclosed in the paper book similar such film sets being employed in various film sets and settings, locations and there is no central excise demand on these activities.
It is surprising a creation of art is construed as a manufacturing activity. More surprising is the fact that this activity is being carried out across the country for the past six to seven decades, even before the inception of the Act, 1944. In the circumstances appellants are singled out for a levy and even more surprising demands have been confirmed under the extended period of limitation. When the visitors consider this as a tourist centre and Government of India through Government of Andhra Pradesh have spotted this film city as tourist centre and when there is overwhelming evidence to show that what is found are exquisite pieces of art proceedings holding them as liable to duty, classifying them under entries and denying exemptions and alleging suppression and fraud is dearly not maintainable. These aspects have not been denied or controverted by the learned authority while entering the finding for confirmation of demand under extended period vide para 14 (Pages 26 & 27 of the order).
It is submitted that proceedings have been initiated under the extended period of limitation alleging suppression of facts. Right from the inception of Central Excise Tariff Act and Rules the items under question have never been assessed to duty. Supreme Court in the case of Collector of Central Excise v. Chemphar Drugs & Liniments [1989 (40) E.L.T. 276 (S.C.)] has held that something positive other than mere inaction or failure on the part of the manufacturer or producer of conscious or deliberate withholding of information when the manufacturer knew otherwise, which is required before it is saddled with any liability beyond the period of six months. When no central excise proceedings had been initiated in the past against any person in the country the assumption that Maya had suppressed or withheld information which they knew to be excisable is unsustainable. The Supreme Court in the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay [1995 (78) E.L.T. 401 (S.C.)] had held that no rule could be pointed out requiring a manufacturer to disclose the turnover of exempted goods. Even assuming it was the appellant could not be held guilty for suppression when the law itself was not certain. Proceedings therefore under the extended period of limitation should fail. In this connection appellants refer to the decision of the Tribunal in the case of Peejay Apparels (P) Limited v. Commissioner of Central Excise, Chandigarh [2001 (135) E.L.T. 842 (T)] wherein the Tribunal was pleased to hold that in view of the long standing practice that no duty was payable there was a bonafide belief and therefore appellants cannot be held to have suppressed or mis-stated facts.
When proceedings are neither maintainable on merits nor on limitation question of imposition of penalty does not arise. In this connection attention is drawn to the decision of the Larger Bench in the case of Hindustan Construction Co. Limited v. Collector of Central Excise, Chandigarh [1997 (89) E.L.T. 123 (T)] wherein the Tribunal was pleased to hold that longer period of limitation would not be applicable as the issue cannot be said to have been free from doubts and consequently penalty proceedings are not maintainable. Attention is also drawn to the decision of the Madhya Pradesh High Court in the case of S.N. Sunderson (Minerals) Limited v. Superintendent (Preventive) of Central Excise, Indore [1995 (75) E.L.T. 273 (M.P.) The Court was pleased to hold that provisions for imposition of penalty are quasi criminal in nature and the burden to prove that the alleged offence is on the department. No facts and circumstances are brought out by the department to show deliberate avoidance of payment of duty. There is nothing in the Excise Rules or Act framed therein that the authorities are bound to impose penalty the moment there is default in payment of duty. When there is a bonafide belief that goods are not liable to duty it would be rather harsh to impose penalty.
Without prejudice to the above submissions that penal proceedings are not maintainable, the order of the learned authority suffers from one more infirmity. The authority has chosen to impose a combined penalty under Section 11 AC and Rule 173Q. Neither can the penalty be combined under Section 11AC and Rule 173Q nor can a consolidated penalty be imposed without quantifying and determining the same on each HUF/individuals. In this connection appellants wish to place reliance on the decision of the Tribunal in the case of Agarzval Pharmaceuticals v. Commissioner of Central Excise, Delhi-I [2002 (146) E.L.T. 190 (T) = 2002 (50) RLT 667 (T) It is also submitted that penalty under Section 11AC is not sustainable as appellants are not manufacturers under the Central Excise Act, 1944.
(b) The Additional submissions are :-
The furniture made at Ramoji Film City for the various user agencies is actually hand crafted by the various independent contractors. These furnitures are not regular furnitures meant for the day-to-day usage. All these furniture are special furniture made exclusively with various cinema sets in mind. From the Central Excise point of view all the furniture can be divided into 2 categories (a) Decorative furniture for the specialized hotels within the Ramoji Film City, (b) Furniture meant for the Prop-Shop available within the Ramoji Film City by name "Parade".
Before going into the details regarding the various furniture it would be appropriate to mention that both the types of furniture mentioned above are exclusively designed and hand crafted. These furniture are not mass-produced and are not meant for commercial sales or usage.
The user agencies will indent for their furniture requirement through a facilitating agency called Harmony, which is also unit of the HUF units within the Ramoji Film City. Harmony is a place where the independent contractors manufacture various types of furniture as contracted with Harmony.
The hotels within the Ramoji Film City are not regular hotels for Tourism and Guests. These hotels are designed and constructed for the lodging requirement of the film personalities and crew. While doing so, they were also meant to be utilized as sets for any particular film requirement. Several examples of films being shot in these hotels can be cited. Few examples of these films are as follows :
(a) Bademiya Chotemiya - Hindi Movie (b) Maanannaku Pelli - Telugu Movie (c) Nee Kidiaaitall Padum - Tamil Movie
These hotels also built with certain "Themes" in mind and have Theme Suites:
Examples: -
(a) Moghul E Azam suite
(b) My Fair Lady suite
(c) Kakamusa suite
(d) Enter the Dragon suite The furniture utilized in these hotels are all hand crafted and decorative furniture, which are also used in film sets. These furniture are not machine made regular furniture which are sold and bought in the market.
These furniture are also vary according to the Theme of the suite rooms in the hotels, they are placed in and may be relating to a period furniture or relating to a cultural background or relating to a cinema set like Palace, Grand Ball Room for dance etc. Therefore, to understand the furniture present in the so called hotels within the Ramoji Film City in the common parlance would be grossly incorrect. These are all hand crafted specialized furniture for the usage in film sets not marketed in the normal trade, as they are made uniquely in the context in which they have to be placed.
From the above, it is clear that the furnitures supplied to the hotels by the independent contractors in consultation with Harmony cannot be excisable.
(i) They would not be classified as normal furniture as they are special type furniture for stunts and special effects
(ii) The prop-shop furniture are not bought and sold in the market
(iii) The prop-shop furniture cannot be understand as furniture in common parlance.
(iv) A furniture are hand crafted and not made by machines.
(v) They are made by several independent contractors Coming to the furniture made by the Prop-shop Parade the following is submitted.
(i) As the name itself suggests Parade is a prop-shop which houses various cinema set requirement for the various film sets. These items are in nature of various types of furniture the equipments required for various scenes like Mock weapons, Mock tables and chairs, partitions etc. The list in this regard can be endless and limited only by the imagination and requirement of the Art Director.
(ii) The furniture of the prop-shop are not utility furniture but make believe furniture. The design and upholstery of these furniture are changeable as per the set requirements.
(iii) These furniture are also designed to cater for the specific stunt requirement of the various scenes in films. Very often we see furniture is being broken on the heads of various artists while fighting etc. These furniture are all specialized furniture which have been made with light wood and which cannot be utilized for the normal usage purposes. Similarly there are various other wood works and furniture, which have very specialized usage in the film sets only and in the normal environment of usage they have not operational utility.
Parade is a sort of prop-shop or rental agency for the set props, which exclusively caters for the film shooting and set requirements within the Ramoji Film City, there is no furniture artifact, which is taken into film sets.
Therefore, both the type of furnitures i.e. one supplied to the hotels and the one sent to prop-shop are not furniture, as we understand in common parlance and therefore they are not excisable.
(c) The ld. DR has submitted : -
(i) The show-cause notice deals with the nature of the furniture in paragraph 10.1, with specific reference to the criteria laid down by the Apex Court in the case of Louis Shoppe v. Collector reported in [1996 (83) E.L.T. 13 The facts regarding furniture-making in the film city, recounted in para 9 of the show cause notice, show that the furniture is made in Harmony for the hotels and Divisions in the film city, in terms of indents placed by them. The furniture is made with substantial use of power-driven machinery.
(ii) In relation to the FRP items, the first plea is the artistic nature claimed for the statues, which is said to place them in the category of handicrafts. However, the FRP statues are made by a process of polymerization of resins and moulding, and not by hand, and thus do not pass the first test of handicrafts, viz., that they should be substantially made by hand. The beauty claimed for the products would not remove them from the category of excisable goods. For example, many kinds of glazed ceramic tiles have visual appeal, but this does not make them into handicrafts or non-excisable goods.
Regarding the FRP sections, it has been claimed that they are not goods, by virtue of the fact that their ultimate use is in building which are part of film sets. The articles under dispute are described in the appellant's documents as beams, cornice, pillars, brackets, jalli, base-platers, wall-panels etc. (paragraph 20.1 of the show-cause notice). Shri Nitish Roy, who was in charge of Maya, deposed that all the artificial structures are made by assembling the individual sections. The sections can be dissembled, re-assembled and relocated. This shows that the individual sections are 'goods'.
(iii) Who is the manufacturer? This is dealt with in paragraph 11 of the show-cause notice and paragraph 9 of the order-in-original. It is seen that the carpenters and painters are paid labour charges on piece-rate basis, as per the 'labour bills'; they are handled by Shri Pratap Singh, an employee of 'Harmony', to whom they report; that the overheads pertaining to the manufacture (e.g., electricity, depreciation of machinery, interest on investment) are incurred by Harmony and billed on the Divisions along with the markup towards profit, which thus flows to Harmony. The carpenters, painters etc. are thus neither charged for the use of resources of Harmony, nor do they receive any share of the manufacturing profit. They receive only labour charges.
(d) Para 9 to 11 of the Show Cause Notice relied upon by the ld. DR read as under :-
"9. OF FURNITURE ARTICLES :
(1) Harmony was established as the Furniture-making unit for the Divisions in RFC. As explained by Shri A. Ramamohana Rao, M.D and Attorney, the starting of Harmony (and Maya) was intended to enable proper supervision and control, while making items to their satisfaction, which were required for the various purpose in Film City. Shri Sudhakarbabu, Additional Manager, DHL also stated that for most of the requirement of the Furniture and fixtures for the hotels in RFC (viz., Sitara, Tara, Sahara and Samrat), DHL purchased the Wood, hardware., which were given to their group-unit Harmony, which has got the expertise, facilities and machinery for making required items. Shri Ravindra Rao deposed that Harmony is a facility Centre with its own Shed, power-connection and machines to make Furniture and other articles of wood.
(2) Shri Pratap Singh, with experience in the field of Furniture-making (and earlier Shri Ahmed), was employed by Harmony as a Consultant (on fixed-monthly remuneration basis), for looking after the activities at Harmony.
(3) The companies and other HUF-Units placed indents on HARMONY for manufacture and supply of furniture (& other articles of wood like doors, Window shutters etc), required by them. These indents were in the form of printed stationery, captioned as 'Requisition for Furniture items' and addressed to 'The Manager, Harmony, RFC', and also letters issued by the personnel from various Divisions, addressed to Manager, Harmony or Carpentry Shed or as Pratap Singh, Harmony etc. Along with these indents, the drawings, designs of the required Furniture items were also given.
(4) As deposed by Shri Pratap Singh, these indents required approval of the M.D. After the approval, he (i.e., Shri Pratap Singh) estimated the quantity of required materials and in turn, indented the respective Divisions for the required materials. (Some such indents in printed stationery form titled 'Material Indent/Requisition Slip' and also letters issued by Shri Pratap Singh on the Divisions, were found available among the recovered records). The Divisions accordingly procured and supplied the materials to HARMONY. The Material Indents (issues) books of DHL (Annexure C-2-8), submitted by Shri K. Ravindra Rao, vide letter dated 1-3-99 (Annexure A-5-1), were seen to reflect the above, bearing signatures of Shri Pratap Singh. In various instances, Harmony also procured the necessary material and utilized the same for the furniture-making activity (either on replenishment basis or charged the cost to the respective Division). Shri Ramamohana Rao, in his statement deposed that his approval is taken for special furniture items, however the regular items are made directly at Harmony, without reference to him.
(5) Depending upon the requirement as per the indents, Harmony's Consultant allotted the works to the various carpenters, painters and liners (upholstery workmen) and gave them the designs, drawings etc. The required materials i.e., Wood, hardware etc. were also given to them. The carpenters along with their helpers and assistants, carried out the woodworking processes, using the power-driven machinery in HARMONY. As stated by Shri Pratap Singh, he supervised and monitored the activities at HARMONY; that once the carpentry work is completed, the goods are painted/polished in Painting/Polishing workshop (by other personnel i.e. painters, polishers and their assistants) and the items are dispatched only after completion of the carpentry and painting work.
(6) The carpenters and painters were paid labour charges by Harmony, on a piece-rate basis (which included the wages of their helpers/assistants). For payment of the Labour Charges, Harmony's Consultant (Shri Pratap Singh) prepared Estimates, which were submitted to the M.D. for approval. As seen from the documents titled as 'Cost Breakup/ Estimate for furniture cost', the carpentry and painting charges were approved by Shri Ramamohana Rao, sometimes after reducing the amounts originally mentioned. The labour charges (rates) were accordingly paid to the carpenters and painters etc, as per the approval given by Shri Ram Mohan Rao. The above method of approval and reduction of the labour-charges was also identified and explained by Shri Ramalingeshwara Rao, Executive-Accounts, Harmony. Shri Ravindra Rao stated that the M.D. approves the rates as per prevailing market rates and as advised by the Consultant. Shri Ramamohana Rao, the Attorney in his statement admitted that the rates of labour charges are paid only as per his approval; that basing on Shri Pratap Singh's advice and using his discretion, wherever required, he determines the rates payable.
(7) For the payment of labour charges, Harmony raised documents titled 'Labour Bills', These labour bills contained particulars of Name (of carpenter/painter), location (i.e. Division name), description of work done, quantity, rate and amount of the labour-charges paid/payable. Such labour bills were found available for the period from 1995-96 onwards (Sl. No. 10 of annexure to panchanama dated 18-2-99-Annexure C-2-3).
(8) Harmony submitted monthly (periodical) Work Reports to the Chairman, Shri Ramoji Rao. These were under the signature of the Consultant. These reports, inter alia contained Division-wise details (of the furniture manufactured) such as description of the item, quantity, date and stages of completion of the manufacture, during a given month or period. Such Work Reports were found available (intermittently) for the period from April/ May'96 to January '99.
(9) HARMONY raised bills/debit-notes on the Divisions towards job charges for the works done (and for the cost of material, if any, supplied/used). These jobwork charges included the labour charges plus the elements of overhead i.e. power, rent, Depreciation, interest on investment and in addition a profit margin, termed as mark-up. For the other HUF-Units, however, no mark-up was charged. (These details are as furnished by Shri Ravindra Rao, Accounts Manager and Shri Ramamohana Rao).
(10) The companies i.e. DHL, UEL etc., deducted amounts towards TDS on contracts' from, the total amount billed, by HARMONY. Under the relevant provisions of the Income-Tax Act, Tax Deduction at Source (TDS, in short) is to be made (and paid) by companies for the contracts, placed by them on others. Thus, it appeared that the companies have placed contracts on Harmony, for the manufacture and supply of Furniture (though there is no written contract, since HARMONY is a sister-concern, as explained by Shri Sudhakarbabu of DHL). To illustrate, vide Journal Voucher dated 31-3-98 of DHL, out of the total amount of Rs. 87,06,489/- billed by HARMONY -termed as 'Room, Restaurant, Lobby and other Furniture labour charges debited by Harmony (vide Bill Nos. 301 and 303 dated 31-3-98); Rs. 1,74,310/- was deducted as "TDS deducted from Harmony on Furniture labour bills and credited to "TDS on Contractor A/C". All the other companies similarly deducted TDS on contract' from the amounts charged by Harmony. [Copies of the relevant documents pertaining to these were submitted by Shri Ravindra Rao, vide his letter dated 3-6-99 (Annexure-A-5(32)].
(11) In their annual Trial Balances (from 1994-95 onwards), Harmony accounted the details of various Furniture items being manufactured under the head of account 'Job works', indicated for each Division separately. Similarly, under the account-head of 'Furniture under preparation', details of various furniture items being manufactured were also shown separately. In the trial balances of the companies like DHL (including the individual accounts of the Hotels - Tara, Sitara etc) under the account-head of 'Furniture under Preparation' (or as Work-in-Progress) details of the Furniture items being manufactured were similarly shown. Shri Sudhakarbabu of DHL, explained that the 'Furniture under Preparation' account shows the pending works at Harmony; that on completion and receipt of the items, the same are accounted as 'completed Furniture'.
(12) For the removals of the furniture and other articles to the respective Divisions, Harmony have not issued any documents like Delivery Challans etc. The clearances were effected under the cover of Office notes, letters etc. This practice was found evident from the contents of the letter issued by Parade, citing receipt of furniture items under Office notes etc. Similar letters covering dispatch of furniture items or the acknowledgements given to Harmony by the Divisions, were found available (ANNEXURE-C-1-1). Shri Ravindra Rao, Accounts Manager admitted that they had cleared the furniture items under kutcha slips for acknowledgement, but however that these were not maintained properly. [Only in respect of certain clearances to PARADE, Harmony have issued Delivery Challans, which were contained in two Delivery Challan Books, submitted by Shri Ravindra Rao (ANNEXURE-C-2-4). These pertaining to 1997-98, however, did not contain the complete details like value etc. Similarly, though certain registers titled Despatch registers (ANNEXURE-C-2-5) were found available, complete details like actual date of dispatch were not recorded therein, while against some entries, the receiver's signature was obtained, but the date of receipt was not indicated for all the entries].
(13) Apart from the above documents/records pertaining to the Furniture-making activity, HARMONY have not maintained a clear and complete account showing either date-wise production or despatch details of the total value of the goods made (i.e. calculated on the basis of material cost + labour + overheads + profit).
(14) Representative copies of all the above mentioned documents i.e., indents/Requisition for Furniture items, placed by the Divisions on Harmony, Material Requisition Form/letters for material-procurement placed by Harmony, Estimate showing reduction of wages and approval given by Shri A. Ramamohana Rao, Work Report, Labour Bill, Harmony's Bill for job charges, Journal Voucher of DHL etc., are enclosed as ANNEXURE-C-1-2 to ANNEXURE-C-1-8 to this notice. (Many of the indents/ letters for furniture, indents for raw-materials, nothings of Shri Pratap Singh allotting the work to carpenters etc., acknowledgements given by the Divisions for receipt of Furniture items/ work done etc., were found available in the files recovered vide Sl. Nos. A-8, B-2, B-17 to B-20 ANNEXURE-C-2-6).
(15) Though Shri Ravindra Rao was requisitioned to produce all the documents pertaining to the activities of Harmony, such as indents/ work-orders placed by Divisions on Harmony, raw-material and finished Furniture accounts, dispatch documents etc., he produced only the 2 Delivery Challan books, mentioned above (apart from other tabulated statements showing the details of Furniture items). Thus, it was evident that apart from the documents and records mentioned above (and those found among the recovered records), no other account of record was maintained by Harmony.
10. , CLASSIFICATION AND DUTIABILITY:
10.1 The processes of cutting, planning, sizing and rounding etc., carried out on wood as per designs and specific dimensions and further assembling of the sized pieces, results in the emergence of distinct furniture items with a separate commercial identity than the wood. Thus, these processes amount to 'manufacture', as defined, under Section 2(f) of the Central Excise Act, 1944. Articles of Wooden Furniture are marketable goods. In the instant case, Harmony has manufactured the furniture and has cleared it to other companies and HUF divisions thus establishing the marketability otherwise also. By virtue of the aspects of manufacture and marketability, Wooden Furniture articles are excisable goods, falling under Chapter Sub-Heading 9403.00 of the Schedule to Central Excise Tariff Act, 1985 and dutiable as such at the rates specified against the heading from time to time. Goods falling under CSH 9403.00 are specified for the purpose of Small-Scale exemption. No other exemption is available for the Wooden Furniture items. (Though Notification No. 76/86-CE provides exemption from whole of excise duty to 'Handicrafts', the Hon'ble Supreme Court in the case of 'Collector of Central Excise, New Delhi v. Louis Shoppe [1996, (83) E.L.T. 13 (S.C.)] held that 'Wooden furniture as such does not qualify as handicrafts'. Further, the Apex Court laid down two tests to be satisfied : '(1) It must be predominantly, made by hand. It does not matter, if some machinery is also used in the process, and, (2) It must be graced with visual appeal in the nature of ornamentation_or in-lay, work or some similar work lending it an element of artistic improvement; such ornamentation must be of a substantial nature and not a mere pretence." In the instant matter, the wooden furniture items are manufactured by Harmony with the aid of machines, which are used for planing, rounding, sizing etc., and thus predominance appears to be of machinery-use and not otherwise. Further, these are identified and dealt with as Furniture items only (by Harmony and also the Indenting Divisions) i.e., as Tables, Chairs, Cots etc. and not as 'handicrafts' containing the substantial ornamentation, in-lay or similar work and artistic improvement, as specified by the Supreme Court. They are used only for utilitarian purposes in hotels and offices and not for their decorative value. The method of manufacture of these Furniture items, is essentially based on the drawings and designs and pre-specified dimensions. Therefore, these are not items produced by craftsmen, basing on their individual imagination and creativity, to constitute handicrafts. By virtue of this position and considering the Apex Court's ruling, the wooden Furniture items produced by Harmony, are not handicrafts, eligible for exemption from Excise Duty).
11.
11.1 From the details mentioned above, it is evident that HARMONY has manufactured excisable and dutiable Furniture items. Vide letter dated 26-3-99, submitted by Shri Ravindra Rao, Accounts Manager (ANNEXURE-A-5-9), it was claimed that "no manufacturing activity is taken by Harmony. HARMONY is a facility centre only possessing necessary expertise and the above said manufacturing activity is offloaded to independent sub-contractors; that HARMONY and identified more than 60 sub-contractors - who undertake job works relating to furniture/partitions on job-charge basis and further they are independent manufacturers of furniture/partitions." S/Shri Ravindra Rao and NLN Das, Sr. Law Officer put forth similar versions, in the course of their statements given under Section 14 of the Act.
11.2 Under Section 2(f) of the Central Excise Act, 1944, 'manufacturer' includes not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account.
11.3 In the instant matter, the RR-HUF Unit HARMONY was established within RFC, for the purpose of manufacturing Furniture for the other Divisions - as detailed vide Para 9.1 supra. Towards this, Harmony employed a Consultant, experienced in Furniture-Making, on a monthly-remuneration basis, in a supervisory and managerial role. Harmony also employed various carpenters and painters etc., on 'piece-rate wages' basis. The said Consultant allotted the work along with drawings and designs and also gave the required materials to these carpenters & painters. Under the overall supervision and monitoring by Harmony's Consultant, these carpenters and painters along with their helpers and assistants carried out the respective works of planning, Founding, sizing, painting and lining works etc. 11.4 In order to ascertain the terms and conditions under which these carpenters, painters, liners were working, some of them (who have been working in HARMONY continuously for longer period of time), were summoned to give their depositions under Section 14 of the Act. In their statements dated 3-5-99 & 4-5-99 (Annexure-B-8 to B11), S/Shri M.V. Chary and U. Satyanarayana, Carpenter and Chand Miya, Painter/polisher and Ahmed Pasha, liner, inter alia deposed to the effect that:
(i) they were hired to work in Harmony, by the Consultant of Harmony (i.e. Shri Ahmed or Shri Pratap Singh),
(ii) Shri Pratap Singh of Harmony allotted the works to them and gave the designs, dimensions etc., and also the materials required for making the Furniture items,
(iii) That he inspected the work done by them,
(iv) That there is no written contract or agreement for the work done by them, that they quote the labour charges depending on the work involved, the same is submitted for approval of M.D. Shri Ramamohana Rao; that the rates mentioned by them are generally approved at lesser amounts and that they did not object to the same and, received payments accordingly.
(v) That they charge for only the labour contributed by them and their assistants, that they do not pay any consideration to Harmony for the use of machines, power etc., nor has Harmony taken any deposit/security from them, that they receive only the labour charges and nothing more,
(vi) That the labour-charges paid to them are as per the approval of the M.D. only,
(vii) That they work only as per the instructions given by Shri Pratap Singh and none else and that all the other "carpenters, painters work under similar terms/conditions, and
(viii) That even repair works etc., are also allotted by Shri Pratap Singh only, and that whoever (in RFC), requires work, the same is informed to Shri Pratap Singh only.
11.5 In their statements given under Section 13, S/Shri Ramamohana Rao and Shri Ravindra Rao also confirmed the position that the rates of labour charges, are as approved by Shri Ramamohana Rao only. Shri Ramamohana Rao deposed that the wages are paid as per his approval only and that at times, he has received objections (on reducing the rates). Though Shri Pratap Singh initially (on the date of search), stated that the rates are as orally agreed upon; the fact that the labour charges are paid only as per the M.Ds approval was found evident from the documents i.e. Estimates and also from the statements of the above persons. Further, this position was also clearly states by the carpenters, painters and liner etc. 11.6 Though HARMONY have not taken these carpenters and painters on their rolls as regular employees, the following facts reveal that they are only the labour-force employed by HARMONY and not independent manufacturers (or sub-contractors), as claimed :
(i) The carpenters and painters along with their assistants have worked, as per the work-allotment, directions and supervision of the Consultant employed by Harmony, using the machines and electricity of Harmony and thus they are not independent. They do not provide or contribute any material required for Furniture making, since all the materials were issued by Harmony, after procuring the same from the Divisions. Further, they have carried out the works as per the allotment made by Harmony's Consultant. Thus, their working was not independent, as per their own schedule, as would have been the case if indeed, they were sub-contractors for Furniture-making.
(ii) As the terms themselves indicate, 'labour-charges' paid to these carpenters & painters, on piece-rate basis, as per the 'Labour Bills', were only towards the labour contributed by them and their helpers/assistants. The rates of these labour-charges are further based upon the discretion and approval of the Proprietor (Attorney) of Harmony. Thus, there is no negotiation or agreement between carpenters etc & Harmony and hence, the transactions between Harmony and the carpenters are not on 'principal-to-principal.' basis (even to term the carpenters etc., as sub-contractors).
(iii) The labour charges paid to these carpenters and painters etc., were not adjusted in any manner, towards usage of HARMONY'S machines, consumption of electricity, rent for space etc., as should have been the case if these carpenters were independent and treated as principals, which however does not appear so. The reductions effected by the M.D., were only as per his discretion and not equitable to the above elements. This was clearly spelt out by Shri Ramamohana Rao who stated that 'there is no adjustment for elements of power, overheads, ma- chine use etc, in the amounts paid to the contractors'.
(iv) The labour of these carpenters was totally placed at the command and discretion of Harmony's Consultant. This was evident from the fact that they were allotted all types of jobs like repairs, fixing of hardware etc. List of some of Harmony's labour bills pertaining to the repairs done by these carpenters etc., is enclosed as ANNEXURE-C-1-9. The labour charges for these works were decided by 'HARMONY'S in-charge' (Shri Pratap Singh), as deposed by Shri Ramalingeshwara Rao of HARMONY. The above was also admitted by the carpenters and painter etc, who deposed that whatever work is there in Film City, the same is given to them only by Shri Pratap Singh. The letters/correspondence contained in Files B-18, B-19 (An-nexure-C-26) also depicted the fact that these carpenters, painters have attended to various miscellaneous works, through Harmony only.
(v) All the overheads pertaining to the manufacturing activity i.e., expenditure towards power, rent, use of machines and also elements like depreciation, interest on investment were incurred by HARMONY and billed, on the Divisions, along with the margin i.e. markup towards profit, which thus/flowed directly to them. The carpenters, painters etc., were not involved in any manner, either for being charges for the overheads etc., nor for being given a share of manufacturing profit, the only remuneration received by them being the 'Labour-charges' as decided/approved by HARMONY.
(vi) The companies viz., DHL and others deducted TDS on contract' from the amounts billed by HARMONY, which, included the overheads and profit of HARMONY. This clearly reveals that HARMONY is treated as the contract manufacturer, on who the companies and other Divisions in RFC placed the job work of Furniture-making. If indeed the carpenters etc., were independent manufactures and sub-contractors, as claimed, considering the commonality of the business group, TDS need not have been paid at all since each carpenter or painter was an individual or at best, TDS should have been deducted from payments made to them and not from the job charges billed by Harmony which included the additional elements of overheads and mark-up.
(vii) In its Trial balances, Harmony have accounted, the work undertaken by them as 'Job works', against each Division's name. This further confirms that the furniture making activity has been undertaken by Harmony on job work basis, for the other Divisions. In this context, the contents of a letter dated 2-12-97, issued by Shri G. Srinivas to Shri K. Ravindra Rao (Annexure C-1-10), clearly bring out the fact that the Divisions have placed job works on Harmony, though no written contract or work order was given. Vide this letter, a specific mention is made of 'job work_given by Dolphin to Harmony.' Vide his letter dated 10-5-99 (ANNEXURE-A 5-29, Shri Ravindra Rao claimed that 'all Divisions are placing job work orders through Consultant on contractors, but since bills are settled by Harmony, TDS is deducted by the Divisions.' Considering the contents of the above mentioned correspondence of Dolphin Hotels and also the details given vide paras 9.1 to 9.5 supra, the above claim of Shri Ravindra Rao, appears to lack merit and is not borne out of the facts evident in their documents. From the above, it is also evident that even in the absence of a written work order or job order given by the companies, the transaction between the other Divisions and Harmony, as per their own accounts and correspondence, is that of raw-material supplier and job worker. Thus, the carpenters and painters etc., emerge to be only the persons working under Harmony, the job-worker. By themselves, these carpenters, painters etc. do not constitute to be job workers or sub-contractors. These persons appear to be merely the labour-providers for Harmony, Shri Ramamohana Rao, Attorney of Harmony, when questioned as to why the carpenters, painters etc, were termed as contractors, categorically stated that 'carpenters and painters work under the contractor, sometimes the contractor himself does the painting work etc.) Thus, it emerges that the carpenters and painters, employed by Harmony are termed as 'contractors, in terms of the labour provided by them (along with their assistants and helpers) and they are not independent 'sub-contractors' for the Furniture making activity as a whole.
(viii) Even in their own correspondence and letters, the personnel in RFC have clearly mentioned that the manufacturing activity is done by Harmony. The Divisions referred to Harmony as 'Furniture Unit', Carpentry Shed etc. and accordingly indented Harmony for supply of the material. Thus, it appears that even within their own internal annals, the Divisions in RFC have dealt with Harmony as the manufacturer/manufacturing unit. This is also evident from the letters mentioned vide paras 9.1 to 9.5 supra. For example, vide Inter-Office memo dated 16-6-98 (ANNEXURE-C-1-11), Shri Pratap Singh, the Consultant of Harmony, addressed Shri Nitish Roy (and also the M.D. and Additional Manager of DHL), to inform that 'as per your instructions, we have undertaken the manufacturing of the following furniture....'.
(ix) And finally, the fact is that any individual carpenters or painter has not by himself done the complete activity of manufacturing the finished furniture. Each of the carpenters, painters etc, along with their helpers and assistants have carried out only the allotted task/process, in the course of making the complete Furniture items. Further, while the carpenter and assistants have done the required woodwork, the painting, polishing jobs have been done by others and the lining work was done by different persons. By this fact and considering that there cannot be two manufacturers for one item, it appears that the carpenters are not sub-contractors or independent manufacturers, but only the labour-force, employed by Harmony on piece rate wage basis. [As a common practice in small-scale and medium scale industry, a manufacturing firm or company, employs its labour-force through a labour-contractor. In these instances also, the wages i.e., labour-chargers, payable to the labour contractor are determined on a piece-rate basis i.e., dependent upon the quantum of production or processing. The labour-contractor, would in turn make payments on daily wages basis to the workers, employed by him. Though it is the workers who perform the actual processes, resulting in the manufacture of the finished product, they do not attain the status of 'manufacturer', since they have contributed only their labour to the production process. The firm or company which has engaged the labour-contractor and the labour force provided by him, remains to be the 'manufacturer', as inclusively defined under Section 2(f) of the Central Excise Act].
11.7 From the above narrated details, it clearly emerges that the RR-HUF Unit - Harmony (established for the purpose of Furniture-making, with its own Shed and other infrastructure facilities viz., electricity connection, power driven machinery), has employed a Consultant and also the carpenters, painters, liners - along with their assistants and helpers, to carry out the processes resulting in the manufacture of finished Furniture items. By virtue of this position, Harmony appears to be the 'manufacturer', as defined, under Section 2(f) of the Central Excise Act, 1944."
(e) from the submissions, it is apparent that there is no conflict as regards the processes undertaken at MAYA and HARMONY divisions. The dispute is regarding the classification of the entities emerging at MAYA and HARMONY and if exigible who is the manufacturer and whether based on the case law relied upon, the demands other liabilities could be arrived at.
(f) From the Book "What an Art Director Does.- An Introduction to Motion Picture Production Design" by Ward Preston published by Silman-James Press, Los Angeles, (ISBN : 1-879505-18-5); the Chapter on Set Construction, as extracted herein below would be very relevant to arrive at and indicate of what a FILM CITY and its division are engaged in:
"Set construction on a soundstage is the meat and potatoes of art direction. The film industry's years of experience with this system has resulted in the closest thing that Hollywood has to an assembly line operation. When compared with the confusion and frustration of building sets on location in a warehouse with semi-trained personnel, working in a full studio facility is almost like a holiday. Consider the various shops and departments at the disposal of the art director:
The Mill not only has every power woodworking tool imaginable, but also has floor layout space large enough to pre-assemble all but the largest sets. The lumber and molding racks would put many lumber yards to shame. And if the exact molding you need isn't on hand, they have shaper machines that can run more. Indeed, if the profile isn't the right configuration, new knives can be ground to your specifications. The lathe man can produce anything from balusters and porch posts to Civil War cannons.
If you a stickler for reality, you could have that same cannon made by the Metal Shop. Lathes, mills, sheet-metal shapers, and foundry facilities are basic fare for this valuable studio shop. The metal shop is often near its second cousin, that house of wizardry called the Prop Shop. As the name implies, they can make anything from a poison-concealing locket to a 30-foot replica of the Queen Mary. As often as not, the prop shop is also in the repair business. Making antique sewing machines or Victorian automatons workable would not be unusual requests.
The Special Effects department has overlapping needs with the prop shop and often shares facilities. For instance, the prop shop will build the consoles for a mission control centre, and the special-effects team then brings them to life. The frequent appearance of computer images in film scenes has created a new special-effects technician: a computer programmer who can stand by on the set to operate the various monitors. He also can usually provide the special TV electronics necessary to prevent "banding" on the picture tube. Unique to this department is the casting of breakaway glass. Explosive storage and handling, of course, is done in special licensed facilities. Today, special-effects technicians are usually separate contractors operating out of shops apart from the studios.
No, the Staff Shop isn't where the supervisors hang out. Staff is a plaster of Paris material with a fibrous binder that came into existence when the designers of the temporary buildings for the first World Expositions were seeking a substitute for cut-stone ornamentation. It's derivation is generally attributed to an old German word staffieren: to fill out or trim. Some people feel more comfortable calling it the "plaster shop." If the staff shop is given a prototype model, they can cast duplicates of almost anything. And, if you don't have a prototype, they will bring in a modeler or sculptor to make one.
The earliest of the backlot streets used staff "skins" to imitate the exterior surfaces of brick or stone buildings. Because of the weight of plaster, these skins today are molded in fiberglass, foam rubber, or vacuum-formed plastic. The development of resins for castings has also put the staff shop in the foundry business. Hardware door escutcheons, raised letters, and ornamental hinges are common requests.
Now is probably the time to mention the Hardware Department. Pilferage on motion-picture sets has not usually been a problem. However, if any single category of items can be regarded as in jeopardy, it's the hardware. For some reason, these items are considered fair game to those of a felonious nature. Of course, there'll be some surprised vandals when the brass paint comes off those plastic resin key plates. It's a blessing that the imitations are available. Gathering enough matching hardware to complete a large set would be next to impossible without them. The hardware department normally has its own technician who will install and remove all the locksets, bolts and latches. This is also the place where you'll find metal numerals for doors, mail slots, door bells, and bath accessories.
For the bathroom fixtures themselves, and the many other plumbing devices that are needed to complete a realistic set, visit the wonderful world of the Plumbing Department. I am always amazed at the diversity of plumbing fixtures that studio assembles over a period of time. Aside from the obvious residential facilities, I've also run across railroad and shipboard wash basins, steam radiators (both real and lightweight), European one-pass water heaters, restaurant dishwashers, and a stainless-steel theraupeutic whirlpool bath.
Even though it is more often the domain of the set decorator, the art director will become a regular visitor of the Electrical Fixture Department. Giant crystal chandeliers, street lamps, neon signs, bracket wall lights, and, strangely, gas-fired medieval wall torches adorn this exotic warehouse. They also have wall switches and electric outlets appropriate to most eras and countries. By the way, for a long time the head of this department at Fox Studios was Bill Ryan. He stayed on and continued to efficiently run the fixture shop there even after his brother-in-law, Richard Nixon, became the president of the United States. As they say, "There's no business like show business."
While we're at it, we might as well pay tribute to the other venues claimed by the set decorator, but always toured by the art director. Each studio has a Property House, but I doubt if any show has ever been dressed out of a single house. Some prop houses are known for their specialities, such as weapons, electronics, or hand props. Don't visit a prop house when you're on a limited time schedule. You'll never make up for the time you've spent browsing.
The Drapery Department is not only a lifesaver when you have to hide a wall on location, but a good drapery man can suggest window treatments that might not have occurred to you. Once, when asking the name of the draper man, he replied that I could call him "Rags". I went into a long discourse on how creative it was that he should pick such an appropriate nickname. No, he said, it was short for his Swedish name, Ragnar.
Often drawing from the same fabric resources as the draper department is the Upholstery Shop. Whether its an occasional pillow or the emperor's sedan chair, this shop has probably already done a dozen similar projects. Before committing to an entire seating group in an exciting material, it will pay to have a short meeting with the costume designer. It would be a shame to see our actress disappear in the inadvertent camouflage of similar colors.
Prior to getting that new upholstery, the decorator can check the piece into the Furniture Refinishing Shop. Sometimes this is just another function of the paint shop or it can be a separate shop. In any case, it's unlike any commercial shop in that they also have perfected the art of aging and weathering pieces as the story may dictate.
The arts of aging, texturing, and creating faux surfaces make the studio Paint Shop the creative centre of the back lot. When showing my concern over the way a wood replica of an iron fence was being assembled, I was reminded of the art director's first commandment: All the camera sees is the last coat of paint. With that in mind, the importance of this critical craft comes into focus. Painters actually put in very little shop time. The spray booth is here and the color mixer, but most of their work is on the stage or location.
The painters are also the source of some of the best backlot stories in the industry. My favorite is the one about the master set painter Ronnie Kropf, who was in the wrong place at the wrong time. While working alone one night painting a nearly completed set, he was confronted by the show's producer. "This door isn't in the right place," he barked. Ronnie, although vainly trying to explain his limited duties was, nevertheless, coerced into accompanying the producer on a tour of the set as he cited numerous physical changes that had to be made. When the producer concluded his unexpected walkthrough and was about to leave the stage, this talented painter, by now feeling a closer bond with the executive, left him with the reassuring valediction; "Don't worry, Sir. We'll get this set right if it takes every nickel you've got!"
Painted backings seem to have lost favor in deference to the translucent photographic backings. However, there are still some Scenic Backing Lofts in existence. Most have gone into backing-rental business, and their inventory includes a mixture of painted as well as photo backings. A studio for this operation is unique in that it requires a space for a movable vertical frame that might be as large as 30 feet high and 150 feet wide. To keep every portion of this huge "canvas" within reach of the artist, the frame is capable of being raised or lowered through a slot in the floor into a room below the studio.
The job of hanging the backings, whether painted or photographic, accrues to the studio grips. Not to be confused with the company grips, these crews operate out of the Grip Room and are responsible for striking sets, hanging over-headlight scaffolding, moving stock units to and from the stages, and installing muslin ceilings - as well as hanging backings.
The final studio resource I'll mention and one of the most vital is the Sign Shop. They service the decorator and property master as well as the art director (not to mention executives' parking-space signs), so you can seldom find a more overworked crew. Most now include computer-generated signs as well as silk-screen and hand-lettering options. One of the most difficult types of signs to have made is the amateur "protest sign". A professional sign writer, even with film-studio experience, has a difficult time corrupting his work enough to make it look amateurish. Do these signs yourself or turn them over to a production assistant.
Once you are familiar with all the backup a studio facility has to offer, it's time to start work on stage. A Soundstage designed for set construction will have many advantages over a converted warehouse, i.e., ample electricity to operate power tools, compressed-air outlets for sprayers and tools, running water and sinks for paint crews, level wood floors suitable for nailing, removable sections of flooring over pits into which staircases can descend, an accessible, reinforced overhead grid from which to hang light scaffolding, heating and air conditioning units, and, of course, proper sound insulation."
(g) From the extracts at (f) herein above, it would appear at RFC while the activity at unit 'HARMONY' is what is named as 'Mill' in the extract above that activity at 'MAYA', is combined activity of 'Staff Shop', 'Metal Shop', and the special effects department, while at Parade it is the 'Prop Shop'. A reading of this book indicates that 'Staff Shop' i.e, MAYA in this case, is the place where Plastor of Paris material with fibre binders bring into existence various building, statues, models, sculptures, panels, blocks and the like, which can also be any Fibre Reinforced Glass or FRG material as per requirements of the Art Director of the Films. Revenue has made the following submissions in relation to these items : -
"In relation to the FRP items, the first plea is the artistic nature claimed for the statues, which is said to place them in the category of handicrafts. However the FRP statues are made by a process of polymerization of resins and moulding, and not by hand, and thus do not pass the first test of handicrafts, viz., that they should be substantially made by hand. The beauty claimed for the products would not remove them from the category of excisable goods. For example, many kinds of glazed ceramic tiles have visual appeal, but this does not make them into handicrafts or non-excisable goods.
Regarding the FRP sections, it has been claimed that they are not goods, by virtue of the fact that their ultimate use is in building which are part of film sets. The articles under dispute are described in the appellant's documents as beams, cornice, pillars, brackets, jalli, base-plates, wall-panels etc (Paragraph 20.1 of the show-cause notice). Shri Nitish Roy, who was in charge of Maya, deposed that all the artificial structures are made by assembling the individual sections. The sections can be dissembled, re-assembled and relocated. This shows that the individual sections are 'goods'."
The entities emerging at MAYA are found prima facie to be Handcraft Art Works and no evidence of them being marketable exists.
(h) Another elementary book "The Complete Guide to Sculpture Modeling and Ceramics Techniques & Materials" by Consultant Editor, Barry Midgley, published by Grange Books, 1999 edition [ISBN: 1-85627-971-5] starts with defining SCULPTURE as: -
"an art form which deals directly with real space, unlike painting which creates fictive space on a single place. Sculpture, being three-dimensional, must occupy, interact with or enclose actual space. A form may be compact and solid or armed with projections intruding into the surrounding environment. It may be hollow, linear or pierced, giving access to its own internal space. Because sculpture has to have a real existence, however temporary, in a complex and cluttered world, a sculptor must be able to match perception and imagination with practical, technical skills. Sculpture in the round demands a coherent combination of many different design elements, as it will be seen from several different viewpoints, and ideally each view should be equally worked out. Relief sculpture presents quite different design problems, since a complicated series of actual spatial relationships may have to be indicated within a relatively shallow depth of material. The particular challenges to a sculptor's capabilities may be overcome by learning or by instinct, but, inevitably, it is only in practice, not in theory, that the solutions are found. The three basic methods of creating sculpture with raw materials are carving, modeling and construction. Carving and modeling are the oldest methods, and the basis of sculptural traditions, whereas construction has only been fully exploited and accepted in the twentieth century. Casting is a fourth basic technique, but this is a process of reproduction, not of original shaping."
(Emphasis Supplied) And, thereafter this book lists out various nuances and forms of material like Clay, Pottery and Ceramics, Wax, Mould-making, Casting Metal, Resins and Glass Fibre Reinforced plastics, Wood, Stone, Plaster, Concrete, Plastics as material with which sculptures can be obtained. Therefore, all Entities emerging at MAYA would be sculptures. An art form of Statues and Sculptures in any form would be classified by the HSN on which the Central Excise Tariff is based under Chapter 97. This Chapter 97 of HSN is not included, or is deliberately excluded from, the Central Excise Tariff Act, 1985; keeping in view the levy of duty under Section 3 of the Central Excise Act, 1944 could not be extended to Artistic Creations. All entities which emerge at 'MAYA' in this case are to be considered for classification as work of Arts. They are not reality, but are only an artistic imitation of reality. Thus they are classified accordingly under Chapter 97 of the HSN. Therefore, Artistic works made from any material, including clay, Plastor of Paris, FRG etc, would not be included or are excluded, from the purview of the Schedule to Central Excise Tariff Act, which does not have a chapter analogous to Chapter 97 of HSN on Works of Art etc. In this view of the matter, duty under Central Excise Act, 1944 is not levied on the 'Works of Art' emerging at MAYA, Since they cannot constitute to be manufacturers in common parlance. No duty on moulds used at MAYA could be levied in view of Hindustan Sanitary Ware [1998 (104) E.L.T. 562 We find force in the submissions of the ld. Advocates on this aspect.
(i) The goods which are used for cinematographic film props and for special effects, therefore, like fiction in general, are used to make the unreal, real and true to life. They are used in manipulation of images. Structures so used in front of the camera are to serve the purpose of entertainment. Entertainment in movies as in literature, is largely identified with fiction, especially narrative fiction so realism achieved in visual story telling become, a yardstick of success or not, in the game of make believe which may effect box-office. The narrative logic is a joke or non-existent in the game of film-making. Therefore, the entities emerging from 'MAYA'; which are erected to use as cinema sets, which may appear or resemble to be a large mosque or a temple or a big mansion or a castle, palace or a hovel, may be only a camouflage, a mirage, an appearance, only for what the Camera sees and in reality they are not a Building, as understood by the Builders and others in the Building Industry. Therefore, parts or full, of whatever that goes into such make believe building of sets, cannot be, by any stretch or common prudence or understanding, be taken to be 'builders hardware' to get classified under Chapter 3925.99 as arrived at by the ld. Commissioner. The 'builders ware' under Chapter 39, cover a particular type and quality and function goods marketable and dealt with in the market as 'Builders Ware'. As found herein above, the goods, under dispute, in this case did not qualify the marketing test of builder wares. A part or full model copy of a building, cannot be building or builders wares. In any case, no evidence has been brought forth in the material on record by the ld. Commissioner as to how the marketing test as 'Builders Ware' is satisfied to charge duty under heading 3929.99. The classification arrived at by the Commissioner cannot be upheld.
(j) As regards the classification of other entities of the 'Staff Shop' i.e., MAYA, in this case, being held as 'Tailors Dummies' falling under Tariff item No. 9618.00, the same cannot be accepted. To arrive at a classification of an entity it is imperative first to understand what the entity under classification is. In the present case, certain items emerging at MAYA may have human forms and one may be led to believe them to be classifiable as Tailors Dummies'. However, it is not only that tailors dummies should have human forms but they should have certain other specifications and use as provided under the Head Notes of 9618 of HSN. There is no evidence to that effect of the use as prescribed, by HSN notes as Tailors Dummies. The forms of Mythical characters, Gods & Goddesses, Ogres, Animals cannot be classified under this heading; forms in human shapes, do not qualify for being covered by these notes. Since the use is not to obtain the correct fitting of clothes during making of clothes or use as models by artists, sculptors or medical students. But the use is for a specific simulation of a scene in the studio. From the paper book, it is found that besides animals, such forms can be of mythological figures or national/international leaders. They could be in full size or bust dimensions. Such replicas cannot be considered to be Tailors Dummies'. Similarly, it is found that there is no test of marketability is satisfied as regards these replicas/statues in question; as regards use or useful as 'Tailors Dummies' as per the HSN notes. Therefore, when these goods are works of an Arts Director, for the purposes of a Studio Set Embellishments and there is no evidence of they being capable of use or as being marketable as 'Tailors Dummies' we cannot approve their classification as 'Tailors Dummies'. The test of marketability is an essential requirement for exigibility. When it is found that the entities in question are falling under Chapter 97 of HSN which is not covered by CETA and the test of marketability under 96 cannot be satisfied, we cannot uphold the statues, statuettes to be classifiable under 9618.00 of the Central Excise Tariff as arrived at by the ld. Commissioner.
(k) As regards the products of the 'Mill' i.e furniture pieces by the RFC Division, 'HARMONY' as it is named from the documents in the paper book, it is found that the items impugned before us could be divided into :-
(i) Items like, various notice boards to chairs, Old Shift Wood Handle Chairs, Sofas, Beds, Cupboards, Nameplates, Keyboards etc. The entities could be broadly classified into items, which are commonly understood as articles of furniture and supplied to hotels.
(ii) Items which are parts of furniture and supplied to hotels for in situ creation of hotel room/lobby-interior furnishing/ furniture.
(iii) Items which are supplied to the various studio sets as props in original or after repairs, painting and refurnishing.
(1) Before proceeding to examine the classification of these items, said to be furniture under Chapter 94.03 of Central Excise Tariff as arrived at by the ld. Commissioner, it is necessary to consider the nature, purposes and use of the items which emerge and go to embellish the studio sets, as props therein. Examining the same, it is found from the Book, Designing Dreams Modern architectures the movies by Donald Albrect, published by Thames and Hudson, 1987 and printed at Harper and Row Press, New York, stipulates at page xii in Chapter 'Introduction': -
".......Building film sets indoors on sound stages encouraged exploration of out of the ordinary designs by liberating film designers from the structural economic and climatic constraints within which architects are forced to work."
Thus the designs for the 'props' on the Studio sets have a definite purpose, other than that of commonly understood use of furniture, that is, to achieve vivid rendering of three dimensional space in reality, on the flat two dimensional movie screen. The very same book at Page XVI reads : -
"........Representing spatial depth is a primary challenge of film architecture, a burden laid on it largely by the limited recording abilities of the movie camera itself. Human beings are able to perceive depth and space by means of stereoscopic vision, which relies on visual data received from two eyes. The camera, however, has only a single lens, which seems to flatten the images it records. Set designers compensate for this phenomenon by employing a series of optical tricks to achieve the illusion of depth. The simplest of this is the placement of walls, screens, or other large objects in the foreground of the picture. Functioning as frames, these elements heighten the perception of distance between foreground and background. Equally effective is the use of false perspective, in which objects in the distance are built in a smaller scale than those in the foreground, again creating the semblance of depth."
(Emphasis supplied) These stipulations for set designers, would indicate that items designed to be placed, located on film studio sets, serve the purposes of creating the designers perspective to show, what is not real, to be a reality. The large items of furniture like bookshelf, almirah and other such pieces and smaller pieces of furniture like table, chair etc., are specifically designed, shaped, reduced or enlarged in size, to serve effectively the purpose of the scene in a studio set subservient to the camera angles required to create perspectives. They are not primarily designed to serve or be used as an article of furniture, as commonly understood or used by the people otherwise in homes, offices etc. The 'props' used on the sets are designed for specific end uses is confirmed from the following passage at page 115 of the very same book: -
".....For the decor of the movie bedroom the set designer was presented with a curious challenge. While the kitchen involved the active functions of cooking and cleaning, both of which were acceptable to the film censor, the sleeping and sexual functions of the bedroom were either static or taboo. The designer was therefore forced to transform the typical functions of the bedroom to allow a heroine to be engaged in an acceptable activity while at the same time expressing her liberated sexuality obliquely. One way of accomplishing the former was to raise the double bed itself on a platform or to position it within a curtained niche. This tactic acknowledged the necessary presence of this piece of furniture in the boudoir, but prevented it from being approached onscreen in the company of men. Another stratagem was to exaggerate both the scale and the position of dressing and makeup tables, stressing the grooming function of the room.
Portraying the eroticism of the "new woman" was less a problem, A heroine's sexual allure could be subtly suggested by placing her on a daybed - A popular item of decor of the period-chaise longue, or sofa, furniture that allowed her to assume a reclining position for reading, telephoning, smoking, or just lounging in elegant pajamas.........."
[Emphasis supplied] This passage as extracted herein above and others not extracted to avoid prolix findings on this aspect, leads to a conclusion that items utilized in studio sets as 'props', which may appear to be a furniture to a common eye, are not actual marketable furniture pieces. Functioning of all 'props' on a film set are with a specific design to achieve and create an aura for the camera to record the narration of the story being unfolded. They are for effect, for Decor over and undersized and designed with the primary objective of visual story telling. Even he wood used is not what quality furniture require, but is cheaper versions. This is reinforced by the following passage from another book named as "create your own stage effects by Gill Davies, A & C (Publishers) Ltd., 1999 Edition, at Page 83, which reads as:
".........Find a suitable chair, ladder or whatever and decide which bits need to break. This operation needs to be carefully controllers undoubtedly some poor actor is going to land on the floor and does not want an unexpected rung or chair leg slicing into his or her arm! Safety must come first.
Separate all the joints and make sure all traces of glue are removed. Decide which parts you wish to flu apart and put these together loosely, by merely pressing into place or using a very light glue. Then make absolutely sure that the rest of the components are very firmly fixed together, because they will come under considerable strain during the 'accident'. This effect will need to be thoroughly tested with the actor concerned to make sure it all works as planned.
Furniture that is not actually going to be used much prior to breaking can be replicated in light weight materials so - if there is a fight in a cowboy saloon and chairs have to be smashed - these pieces could be made of brittle balsa wood or plywood."
".....Pseudo glass might be cast in fine transparent but this will not make the right sound, so will need to be combined with a suitable well-timed sound effect to attain any semblance of realism."
(Emphasis supplied) This elementary books of film stage effects lead to the conclusion that chair, table, sofa, furniture, almirah etc, used in film sets are not real items of furniture. They are designed to create an illusion and 'slapstick' effects, as required, in cinema story narration. In fact, this furniture is not required to be of good quality durable wood. The last coat of paint is only what is seen by the Camera. It is given in a manner required to achieve the desired effect for films. Therefore, these Decorative pieces are being incorrectly termed as furniture pieces in the present case. At the most, they could be termed as furniture to Conjure and designed to that effect or to decorate the set to enthrall and captivate the audience. They should be, if at all called, as furniture, could be termed as "Conjurers Furniture Pieces or Decorations". Such 'furniture pieces' are found to be excluded from being classified under Chapter 94 by Chapter Note 1(k) of Chapter Note 94 of Central Excise Tariff which reads as under: -
"1(k) Toy Furniture or toy lamps or lighting fittings (heading No. 95.03), billiard tables and other furniture specially constructed for games (heading No. 95.04), "FURNITURE FOR CONJURING TRICKS OR DECORA-0TIONS" (other than electric garlands) such as Chinese lanterns (heading No. 95.05)."
Therefore, supplies made from HARMONY to studio sets in original or after refurnishing at PARADE cannot be classified under heading 9403 as arrived at by the ld. Commissioner.
(m) In view of the nature of the item, supplies made from HARMONY or and PARADE to studio sets and otherwise of pieces altered by changing cushion materials, upholstery and paints to look resemble the items of antique or futuristic or new pieces would amount to repair/refurnishing of existing props. Such activity would not amount to manufacture under the Central Excise Act, 1944. The value of such items has to be excluded from reckoning duty on furniture.
(n) Certain items like boxes, notice boards, name plates etc, cannot in any case be included in the term furniture under 9403. No furniture piece is found to be classified under 9401.00, 9404, 9405 & 9406 of the CETA. Value of such items therefore cannot be taken for valuation of furniture under 9403.00. No findings are therefore arrived at by us under these or any other headings as Revenue has not pleaded any alternate classifications. That is also not their case in the notice. Therefore, that issue is closed.
(o) However, certain pieces supplied to office, Hotels, Cafes would get classified as furniture under Chapter 9403.00 of Central Excise Tariff, if they are primarily not used/designed for Studio Props. Parts of furniture which are supplied to hotels/cafeteria and the value thereof would however have to be included in the value of furniture; but in-situ value cannot be taken as they then become part of a Hotel Room, a Civil Construction Building, which are not exigible. Provided that before doing so, such parts have to be determined as an identifiable part of furniture piece of Heading 9403.00, removed and installed in-situ in the Hotels/Cafeteria. As all parts removed and installed as furniture in-situ cannot be included, Specifically those which are excluded by Chapter Note 3(a) of Chapter 94. Therefore, each furniture piece and furniture parts cleared to Hotel/Cafeteria/Office will have to be re-examined and included or excluded after such examination, before they are classified under Chapter 9403.00 and their value included in clearances of furniture under 9403.00.
(p) Once items of furniture cleared from HARMONY, supplied to Hotel/Cafeteria/Offices is determined as arrived at herein above, after identifying each such clearance, then each such item under such clearances which can be classified under Chapter 9403.00, have to be examined for the purposes of granting benefit of 'nil' rate of duty under Notification No. 76/86 dated 10-2-86 and detailed reasoning arrived at, as to why it has not been considered as handicraft in terms of the Hon'ble Supreme Court's decision on this subject in the case of Louis Phillipe and facts.
(q) Such items as are identified as dutiable furniture under 9403 and parts thereof as herein above, thereafter have to be considered for their eligibility for Small Scale Exemption Notification on Annual Turnover Basis for various years. The benefit of Sri Chakra Tyres decision [1999 (108) E.L.T. 361] has to be granted for 'Valuation' for Exemption as well as for the purposes of levy of duty, if any, if the exemption limits are being crossed. Since this would require extensive and intensive re-determination of facts, we would set aside the order and remand the matter back for re-determination of the quantum of Furniture which could be classified under Chapter 9403.00 and duty if any, therefore, be worked out as above.
(r) Since the matter is being remanded back to re-determine the classification of such furniture as supplied to Hotel, Cafeteria/ Offices, we leave the question of who is the manufacturer of the same and is liable for duty open along with other questions regarding limitation raised by the appellants.
(s) Since the matter is being remanded back for re-determination of duty, we would set aside the penalty, confiscation and redemption fines imposed, and order that the same may be re-determined, if found liable consequent to the proceedings in remand.
6. In view of our findings herein above, we hold : -
(a) Entities emerging at 'MAYA' viz., FRP Sections are not classifiable under 3925 and FRP/POP statues &/or entities are not classifiable under Chapter 9618 and they are found to be non-excisable.
(b) Furniture and Props supplied to Studio sets from HARMONY and PARADE cannot be considered to be furniture falling under Chapter 9403.00 as they are excluded from the purview of Chapter 9404.00.
(c) Certain items are not found to be classifiable under 9403 and as arrived at by the ld. Adjudicator and value thereof cannot be included in value of goods under 9403.00.
(d) Certain items of furniture and parts thereof which are supplied to Hotels/Cafeterias/Offices etc. i.e. other than studio sets, which could be classified under 9403.00 only and the rate of duty on the same is required to be determined, after considering their eligibility under Notification No. 76/86 dated 10-2-86.
(e) The value of such goods, which are held, to be dutiable after such consideration, as found by us, is to be determined with reference to the decision in the case of Sri Chakra Tyres [1999 (108) E.L.T.361].
(f) After determining the valuation as herein above, the eligibility for SSI notification is to be determined.
(g) Other issues are left open.
7. Appeal disposed off in the above terms.