Customs, Excise and Gold Tribunal - Tamil Nadu
Facit Asia Limited vs Collector Of Central Excise on 21 February, 1994
Equivalent citations: 2003(161)ELT1003(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. By this application the appellants have prayed for dispensation of the pre-deposit of duty of Rs. 58,30,117.86 and penalty of Rs. 10,000/- demanded in terms of the impugned order of the Collector of Central Excise, Coimbatore dated 10-3-93. Since we propose to dispose of the appeal itself on a short point, we grant waiver of pre-deposit of duty and penalty, pending appeal.
Appeal :
2. When the matter came up on 1-9-93, the appellants had prayed that the goods in respect of which duty has been demanded were covered by exemption Notifications 83/90, dated 20-3-90 as amended by Notification 156/90 and Notifications 45/92 and 58/92; and not 280/88, dated 12-11-1982 and pleaded that no duty is payable in terms of these notifications. The appellants pleaded that no doubt they had not taken this plea before the learned lower authority and being a question of law they may be permitted to take this plea before the Tribunal. They took time to file additional grounds in regard to the same and thereafter the Department also filed a counter and also took instructions. The matter was, therefore, finally heard on 4-2-94. During the course of arguments it was noticed that the appeal papers are signed by the Internal Auditor, who did not appear to be the Principal Officer of the appellants' company and the Bench wanted to see the resolution of the Board of Directors under which the said Internal Auditor was authorised to sign the appeal. After the same were admitted the matter has been taken up for recording the order.
2. Shri Uttam Reddy, the learned Advocate for the appellants pleaded that the goods in respect of which duty has been demanded are Dual Action Nozzle Brush which is an accessory to the vacuum cleaners manufactured by them and also brushes. He pleaded that these goods were manufactured by the job workers out of the parts and the raw materials supplied by them. He pleaded that the learned lower authority has demanded duty from them even though the same had been manufactured by the job workers. He pleaded that there are several job workers of the goods and the learned lower authority in his order has given a finding that the job workers are not an extension of the appellants, yet he has proceeded to demand duty from the appellants holding that the role of the job workers was very minimal and his finding that only physical process of undertaking the assembly for a given amount by itself alone would not make them as manufacturer. In this connection he drew our attention to Para 20 of the impugned order wherein in the opening line the learned Collector has stated as under :
"It is not my intention to say that the contract workers or the job workers would form an extended arm of M/s. Facit Asia Ltd. It is true that they are manufacturers to certain extent in so far as the assembly is concerned."
He pleaded that it is settled law that the job workers, unless it can be shown that they are the extension of the appellants, have to be considered as independent manufacturers. He pleaded that the learned lower authority having held that the job worker were not an extension of the manufacturer was in error in holding that they were the hired labourers. He pleaded that there is no suppression on the part of the appellants in regard to the job work being done by them in the assembly of the accessories in question and the learned lower authority has also restricted their demand to a period of six months. He pleaded that the notifications cited supra are clearly applicable and the appellants' goods, even if held to be chargeable to duty at the appellants' hands, would be exempt from duty. He pleaded that the grounds filed may be taken on the file and the appellants given the benefit in terms of these Notifications. He further pleaded that in case the Tribunal is not inclined to agree to these pleas, the matter may be remanded to learned lower authority for consideration of the appellants plea leaving all other issues also open in regard to the applicability of the notifications as pleaded by him.
3. Shri Jeyaseelan, the learned DR, opposed the plea for additional grounds for consideration at this stage. He pleaded that even if no question of facts might require further investigation, in the light of the additional grounds filed, the appellants' plea for consideration of the same at this stage of the proceedings may not be accepted, as they are themselves to be blamed for not having taken these pleas before the learned lower authority. He pleaded, the learned lower authority has given the reasons as to why duty has to be demanded from the appellants and in this connection drew our attention to Paras 22 and 23 of the impugned order and pleaded that the job workers are more in the nature of hired labourers and therefore duty has been rightly demanded from the appellants.
4. We observe that the learned lower authority has held the appellants as the manufacturer, taking into consideration the relationship between them and their job workers, the nature of the operations and the control exercised by the appellants and also the statements recorded from the job workers. At the same time we find that there are some observations by the learned lower authority which appear to run counter to his own conclusions in regard to as to who is the manufacturer. The thrust of the learned lower authority's finding, however, is that the job workers are only in the nature of contract labourers and for that reason, therefore, the appellants have to be held to be manufacturers. We observe as to who is to be considered as the manufacturer in the facts of this case will have to be decided only after hearing the detailed arguments in regard to the same and also the nature of the contracts entered into between the appellants and the job workers and the degree of control exercised by them for procurement of raw materials as also the manufacturing process.
5. We observe that the appellants have filed an application for urging additional grounds, pleading that Notification 83/90 as amended, Notifications 45/92 and 58/92-CE., dated 30-4-92 and also Notification 280/88 would be available to them and they may not be called upon to pay any duty in case the benefit of this Notification is available to them. We observe that item Dual Action Nozzle Brush falls under Tariff Heading 96.03 and the appellants have shown us from the Tariff heading that so far as the item Dual Action Nozzle Brushes are concerned these will be prima facie covered under this Tariff heading and notifications cited prima facie cover this heading. In regard to Notification 280/88 is concerned, by this notification goods falling under Tariff Heading 4819.90 are exempted from payment of duty. The appellants' other item is paper bags which are used in the vacuum cleaner and this also prima facie appear to be covered under Tariff Heading 4919.90. Inasmuch as the plea is regarding the application of a notification and there is no dispute as regard to the facts, nature of the goods involved, it is settled law that the legal plea can be made at any stage. We, therefore, permit the appellants to raise these grounds. Before going into the aspect of as to who is the manufacturer we would like to deal with the point regarding the applicability of the notifications to the goods in question. Exemption is claimed under Tariff Heading 96.03. This heading covers brooms and brushes and the Tariff heading reads as under :
"96.03 Brooms, brushes (including brushes constituting parts of machines, appliances or vehicles), hand operated mechani cal floor sweepers, not motorised, mops and feather dusters;
prepared knots and tufts for broom or brush making; paint pads and rollers; squeegees (other than roller squeegees)"
The appellant's product is vacuum cleaner and the goods covered under the heading are brushes for appliances. The appellant's brushes appear to fall under this category. Likewise the paper bags cited appears to fall within the ambit of Tariff Heading 4819.90 and Tariff Heading 4819 reads as under :
"4819.00 Cartons, boxes, cases, bags and other packing containers, of
paper, paperboard, cellulose wadding or webs of cellulose fibres;
box files, letter trays, and similar articles of paper or
paperboard of a kind used in offices, shops or the like
Cartons, boxes, containers and cases (including flattened or
folded boxes and flattened or folded cartons), whether in
assembled or unassembled condition :
4819.11 -- Intended for packing of match sticks
4819.12 -- Printed cartons, boxes, containers and cases
4819.19 -- Other
4819.90 - Other
It is seen in respect of paper bags the exemption Notification 280/88 reads as under :
"Exemption to paper bags. - In exercise of the powers conferred by Sub-section (1) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that in the public interest so to do, hereby exempts paper bags (including paper sacks) falling under sub-heading No. 4819.90 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) from the whole of the duty of excise leviable thereon under the said Schedule."
We also find that Notification 83/90 as amended from time to time exempts all goods falling under Tariff Heading 96.03. The notifications cited supra there fore appear to apply to the paper bags, brushes manufactured by the appellants. Therefore, before going into the aspect of who is the manufacturer we hold that in the interests of justice the appellants' plea in regard to the application of this notification has to be considered inasmuch as the same was not urged before the learned lower authority and has been now urged before us, we hold that the matter has to be gone into afresh on this by the learned lower authority. We, therefore, set aside the impugned order and remand the matter to the learned lower authority for de novo consideration in the light of our above observations. Inasmuch as the matter has been remanded, the appellants can urge all pleas, including the plea that the appellants are not the manufacturer under law and the learned lower authority will consider all these plea in accordance with law, after affording the appellants a reasonable opportunity of being heard, since we find that there are contradictory observations by the learned lower authority in regard to the status of the job worker in his finding as brought out by the appellants in their pleas.