Customs, Excise and Gold Tribunal - Tamil Nadu
Chief Engineer (Irr.), Pwd vs Commissioner Of C. Ex. on 15 September, 1999
Equivalent citations: 2000ECR193(TRI.-CHENNAI), 2000(115)ELT789(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. In these three stay applications common question of facts and law have arisen and hence they are taken-up together as per law.
2. E/Stay/173/99 arises from Order-in-Original No. 17/92, dated 29-5-1992 passed by Collector of Central Excise, Madras confirming duty demand of Rs. 13,16,950/- in terms of show cause notice dated 30-4-1991 for the period 1-4-1986 to 31-3-1991 on the ground that appellants had manufactured FCC Slabs/Blocks cleared in respect of Tanks Modernisation Division, Kancheepuram by invoking Rule 9(2) of C.E. Rules read with proviso to Sub-section (1) of Section HA of C.E. Act.
3. It is pointed out by ld. Advocate that the issue is pertaining to manufacture, time bar and duty confirmation on the appellants which has been decided in the case of TNEB which is pari-materia to their own case as issue decided in that case squarely applies to the facts of appellants' own case and the matter could be decided finally in terms of Tribunal judgment vide Final Order Nos. 1660 to 1664/98, dated 21-8-1998 which in turn refers to large number of other judgments in their own case passed by the Tribunal . The issue raised in these matters is that manufacturing activity is carried out independently by the contractors on principal to principal basis in terms of agreement entered into by the contractors with the Executive Engineer, PWD (I/C), Tank Modernisation Division, Kanchipuram. Ld. Advocate submits that the demands could not have been confirmed on the appellants as there was correspondence on this issue pertaining to contractors who had carried out the work of manufacture of these items, and Superintendent of Central Excise, Chingleput had by his letter dated 22-2-1988 referred to the contractors by name who had taken-up the work of manufacture of cement blocks and slabs in terms of contracts entered into between the Republic of India and the European Economic Community (ECC) for aiding a project called "Modernisation of lank Irrigation Systems in Tamil Nadu." By the above referred letter, the Superintendent had called upon the appellants to furnish details of persons manufacturing on their own behalf and give the value of the articles manufactured and further details. Appellants by their letter dated 31-3-1989 furnished copy of the contract and gave in tabulated format the details of manufacture of FCC slabs and PCC blocks for respective casting yards . Further a letter was addressed by the Executive Engineer to Asstt. Collector in March, 1989 drawing reference to the correspondance in giving further details in the matter. Ld. Advocate again refers to the letter addressed by Executive Engineer in this regard giving all the details carried out by the contractors and also informing the AC that activity of manufacturing is carried out by the contractors under the contract awarded to them in the matter. On 16-11-1989, the Inspector of Central Excise, Kancheepuram range again called upon the appellants to produce the agreement copies between the appellants and the contractors and further details. The Executive Engineer, TNEB by his letter dated 7-4-1990 furnished all the particulars again including the contract copies and details. The annexure itself was exhaustive running to several pages . Therefore he submits that the show cause notice issued on 30-4-1991 is misconceived as the activity of manufacture was not carried out by the appellants but by the contractors on principal to principal basis and demands cannot be confirmed on the appellants. Further, he submits that as all the details had been furnished in 1989, the show cause notice issued on 30-4-1990 is clearly time barred. He submits that on this ground the Tribunal had allowed similar appeals of Tamil Nadu Electricity Board as details of contracts had been scrutinized and examined and it had been clearly laid down by the Tribunal that demands cannot be confirmed on the TNEB as manufacturer and the appeals were also allowed on time bar. In view of this ruling, ld. Advocate submits that in this case as facts are similar, appellants appeals are required to be allowed by applying the ratio thereof and also by taking-up the appeals themselves for disposal by granting waiver of pre-deposit and stay in the matter .
4. E/Stay/174/99 in E/1718A/98 arises from Order-in-Original No. 18/92, dated 29-5-1992 passed by Collector of Central Excise, Madras confirming duty demand of Rs. 21,52,717/- in terms of the show cause notice dated 15-7-1991 in respect of PCC slabs/blocks cleared in respect of "Tanks Modernisation Division Tindivanam" for the period from 1-4-1986 to 31-3-1991, by invoking Rule 9(2) of Central Excise Rules read with proviso to Sub-section (1) of Section HA. Ld. Advocate in this case also refers to the details sought by the department from the Executive Engineer in terms of letter issued by the Superintendent of Central Excise. Villupuram on 24-2-1989 . The ACCE also wrote a letter to the Executive Engineer on 31-1-1989 calling for details of the contracts and details of clearances made. This was replied by the Executive Engineer vide letter dated 30-3-1989 giving all the details including details of clearances and details of contracts . Further correspondence was made by Executive Engineer by his letter dated 30-3-1989 along with annexures which gives details of contract nos. number of blocks manufactured etc. for the work including the value of goods and clearance details. The Annexure itself was running in several pages including all the particulars and details. The Superintendent was again addressed by a letter dated 19-4-1989. On 20-10-1989, the Asstt. Collector referred the correspondence made and asked for further particulars which was also replied. Reference was made by Superintendent on 15-6-1990. Thereafter, the Asstt. Collector by his letter dated 19-2-1991 again informed the appellants about the non-observance of Central Excise Rules and non-payment of duty. They again wrote a letter dated 30-4-1991 referring to the conversation and details of discussion the Asst. Collector had with the Executive Engineer. A detailed reply was given on 28-2-1991 and 30-4-1991 informing the department that all particulars had been furnished several years ago. Ld. Advocate submits that the show cause notice issued on 15-7-1991 is clearly time barred and the demands cannot be made on the appellants. As the appellants had given all the details of contract and the annexure to show cause notice itself indicated the details of works which were carried out through the contractors in various places therefore question of treating the appellants as a contractor does not arise at all. He points out to the cited decision in the case of TNEB and seeks for application of same ratio in this case also by granting waiver of pre-deposit.
5. Appeal No. E/2413/98 arises from Order-in-Original No. 19/94, dated 13-7-1994/22-7-1994 passed by C.C.E., Trichy confirming duty demand of Rs. 8,26,626. 50 on PCC slabs/blocks manufactured by the appellants under Rule 9(2) read with proviso to Sub-section (1) of Section 11A . Ld. Advocate points out that the preamble of the order itself indicates that the goods were manufactured by engaging contractors in terms of agreement entered by the department and the contractors that these facts were known to the department and the order itself discloses that the work was carried out through the contractors on principal to principal basis and the contractors were not labourers and hence the duty confirmed is not justified. He also further points out that the correspondence which was exchanged into in this case between the Superintendent of Central Excise commencing from 21-9-1989 and the replies made to the said letter by Executive Engineer on 23-9-1989. Further correspondence was made by AC by his letter dated 25-7-1990 which was replied to on 18-9-1990 . Further reference was also made to letter dated 18-9-1990 addressed by Executive Engineer to the Asstt. Collector enclosing details of contracts and the expenditure to which works were carried out including details of value etc. Further reference was also made to letter dated 25-9-1990 issued by Superintendent calling upon the appellants to furnish a certificate that the particulars of PCC slabs and blocks were manufactured by various contractors. Same was furnished on 9-10-1990. Therefore from this correspondence, ld. Advocate submits that the demand made thereafter a long period of time is barred by limitation and the details furnished clearly indicated that the work was carried out independently by the contractors on principal to principal basis and hence demands cannot be confirmed on the appellants. He points out that the Commissioner himself has in the impugned order referred to the work carried out by the contractors and hence on this ground itself the appeal is required to be allowed.
6. Heard Ms. Aruna Gupta, ld. DR who reiterates the departmental view in terms of findings given by the Commissioner in the respective orders.
7. On a careful consideration of the submissions and on perusal of the entire records and also the judgment rendered by Tribunal on similar issue in the case of TNEB by Final Order Nos. 1660 to 1664/98, dated 21-8-1998. We notice that the issue is identical and hence by applying the ratio thereof, we grant waiver of pre-deposit of the amounts and stay its recovery by allowing the stay applications. As the issue is covered, the prayer for disposal of the appeals is accepted and same taken-up for disposal.
8. On a careful consideration of the submissions and on perusal of the records, we notice that the appellants were awarded with a contract by the Republic of India and the European Community of India (ECC) for aiding a project called "Modernisation of Tank Irrigation Systems in Tamil Nadu" for improved water management and reduction of losses. The SCN and the narration of facts in each of the order discloses about these facts. It is revealed from the facts of each case as narrated by respective Commissioners that appellants were awarded individual contracts to contractors independently on principal to principal basis to carry out the manufacture of cement blocks/slabs to be casted in the centralised places as indicated in each of the appeals. Before the authorities it was indicated that appellants were only provided raw material namely cement, stone, jelly, sand and these activities were independently carried out in terms of the contract awarded and each of the contracts and the terms of the contract, on a perusal, clearly indicates that it is on principal to principal basis and not a labour contract.
9. We have perused in detail these contracts, which is placed on record and which confirms the position that the terms are identical in nature to the one examined by the Tribunal in the case of TNEB (supra). We notice from the correspondence that the Superintendent had referred to the work carried out by individual contractors in his correspondence in 1989 and had required the appellants to give further details. Appellants had furnished details of each of the contracts/agreement entered into and clearances made during the year 1989-90 and hence the show cause notice issued in respect of goods after a lapse of several years is clearly barred by time when all the details were known to the department. Further the agreement clearly indicated that the work was carried out on principal to principal basis by the contractors as their details were furnished to the department from time to time. The respective show cause notice itself gives the details furnished by the appellants in annexures. Therefore the facts of the contracts, no. of blocks/slabs manufactured independently by each contractor is tallied with the show cause notice. When these facts were clear, therefore the department ought to have made to accept the contractors as responsible for discharge of Excise Duty.
10. At this stage, ld. Advocate submits that the item manufactured also is not 'goods' and however as the issue is limited to the points raised, he reserves the arguments on the manufacture in the appropriate case.
11. We have considered the plea. We notice that we have not looked into the aspect of items being goods or not. The appeals are disposed of solely on the ground that the demands ought to have raised on the independent contractors as the work carried out is found to be on principal to principal basis and that the demands were also time barred. Applying the ratio of the Tribunal judgment rendered in the case of TNEB (supra), the impugned order are set aside and the appeals are allowed.