Customs, Excise and Gold Tribunal - Delhi
Elecon Engineering Company Ltd. vs C.C.E. on 26 December, 2005
Equivalent citations: 2006(108)ECC480, 2006(109)ECC480, 2006ECR480(TRI.-DELHI), 2006(200)ELT125(TRI-DEL)
ORDER
S.S. Kang, Vice President
1. Heard both sides.
2. The common issue is involved in both the appeals. These appeals are being taken up on remand by the Hon'ble Supreme Court.
3. The issue involves in these appeals is in respect of the Excisability on parts of structures. The issue is now settled by the Larger Bench of the Tribunal in the case of Mahindra & Mahindra Ltd. v. CCE, Aurangabad, Chandigarh, Kanpur & Chennai, reported in 2005 (190) E.L.T. 301 (Tri.-LB) in favour of the Revenue. The Larger Bench after deciding the issue of excisability on parts of steel structure ordered that appeals be placed before the Division Bench to decide the other issues involved in the appeals.
4. Appellants challenged the order on the ground that the Maharashtra State Electricity Board granted the contract to the appellants for construction/installation of Coal handling plant. During the course of installation of coal handing plant certain parts of structures such as stands, stringers, columns, gantries and beams etc. were fabricated. The Revenue issued a show cause notice to the appellant for demanding duty on these parts of steel structures. The contention of the appellant is that these parts of steel structures were fabricated by the sub-contractor M/s. T. Bava and this fact was disclosed to the Revenue. The contention of the appellant is that M/s. T. Bava contractor manufactured the item in question but the Commissioner of Central Excise in the impugned order wrongly held that M/s. T. Bava contractor is only hired labour of the appellants and appellants are liable to pay duty in respect of the items in dispute. The appellant relied upon the terms and conditions of the contract to say that M/s. T. Bava, Contractor is the actual manufacturer as the appellants awarded the contract for fabrication of structures and M/s. T. Bava, fabricate all the items in question hence M/s. T. Bava is the manufacturer. The appellant relied upon the following decisions of the Hon'ble Supreme Court and the Tribunal:
1. Collector of Central Excise, Baroda. v. M.M. Khambhatwala
2. Pawan Biscuits Co. (Pvt.) Ltd. v. Collector of Central Excise, Patna
3. Surindra Engg. Col. Ltd. v. Commissioner of Central Excise, Chandigarh
4. Aldowin v. C.C.E., Chennai-II
5. The contention of the appellant is that in the above decisions it was held that in case the raw materials and machines were supplied by the contractor for manufacture of goods to the Sub-contractor in such a situation, the sub-contractor is the manufacturer of the goods. The contention of the appellant is that as the appellants are not the manufacturer of the goods in question, hence the demand of duty and imposition of penalty is not sustainable.
6. The appellants also made a alternative submission that whole demand is also time bar as the demand for the period September, 1986 to December, 1988 and show cause notice was issued on 24.10.89 on the ground that the goods in question are excisable. The contention is that prior to 1.3.88 there are numerous decisions of the Tribunal which are upheld by the Hon'ble Supreme Court, where it was held that the goods in question are not excisable and after 01.3.88, i.e. after amendment in the tariff, the issue of excisability is now settled by the Larger Bench of the Tribunal in the case of Mahindra & Mahindra Ltd. v. C.C.E., Aurangabad, Chandigarh, Kanpur & Chennai (Supra). Therefore, no suppression with intend to evade payment of duty can be alleged on the appellants.
7. The contention of the Revenue as per the terms and conditions of the contract between appellants and M/s. T. Bava contractor, it is clear that such contract is the hired labourers. Therefore, the demand was rightly made.
8. We have perused the terms and conditions of the contract under which the appellants awarded the contractor for fabrication of works to M/s. T. Bava. As per the terms and conditions all the consumables, tools, tackles, supervision, labour, machinery and other items required for carrying fabrication work are to be arranged by M/s. T. Bava, Contractor. In case of any rejection of material, the cost of material so rejected is also to be born by M/s. T. Bava, Contractor. M/s. T. Bava, Contractor is also liable to pay any compensation, if any, to their workman. The payment is to be made in respect of the goods fabricated by the Sub-contractor at the rate prescribed under the contract and as per the terms of the payment, 80% payment is to be released against the monthly progressive for complete fabrication structure, 5% payment is to be released on completion of assembly, 5% payment is to be released for the structure of the full drive and remaining payment is to be made on the satisfactory completion of the work. We find that the Hon'ble Supreme Court in the case of Collector of Central Excise, Baroda v. M.M. Khambhatwala (Supra) held that the household ladies are the manufacturer of Agarwati though raw material was supplied by M/s. M.M. Khambhatwala and also paid wages on the basis of number of pieces manufactured by the ladies. The sale proceedings were to be sent to M/s. M.M. Khambhatwala. In the case of Pawan Biscuits Co. (Pvt) Ltd. (Supra), the Hon'ble Supreme Court held that M/s. Pawan Biscuits Co. (Pvt.) Ltd. manufactured of biscuits even the raw material was supplied by M/s. Britania Industries and biscuits and the raw material is to be regarded as belonging to M/s. Britania Industries and biscuits are supplied under Britania Court also Industries instructions.
The Hon'ble Supreme noted the fact that as per the agreement in case biscuits were not manufactured up to the required standard then the same were to be destroyed and in respect of those biscuits no payment is to be made and M/s. Pawan Biscuits Co. (Pvt.) Ltd. would liable to pay the cost of ra-material which has got spoiled. In the present case also as per the terms and conditions, which is for fabrication for structures and in case for any rejection of material, the cost of material is to be born by M/s. T. Bava contractor. As per the terms and conditions of the contractor for carrying out the fabrication work M/s. T. Bava has to be arranged for all consumable labour and machinery etc. In these circumstances, the finding of the Commissioner of Central Excise that M/s. T. Bava, Contractor is a hired labourer is not sustainable, hence set aside. As M/s. T. Bava, Contractor is the manufacturer of the goods in question, therefore, the demands from the present appellants are not sustainable, hence set aside. Therefore, when going into the other issues, the demand and consequential penalties are also set aside and the appeals are allowed.